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Fair bill for cable providers, consumers irks local government

So shrill have local governments become in their opposition to opening up the provision of video services in Louisiana that they have resorted to promoting outright misleading or just plain fake issues to stop its advancement.

HB 699 would permit non-cable television channel providers to enter into franchise agreements with the state, bypassing local government. Earlier, much fuss was made about allowing the bypass as potential providers, mainly telephone companies with broadband capacity, wanted to do away with the artificially-imposed startup costs typically demanded by local governments, as an inducement to enter the market and to guarantee entry (local governments do not have to grant a franchise even if it is an identical or better deal to any one with an existing franchisee).

As previously noted, local governments had allied with cable companies to try to stop the bill. Cable companies, of course, wish to avoid competition but the motive for local governments is that through their agreements, they can impose extra requirements on franchisees and use the rates charged as a backdoor way to raise revenues from their citizens. HB 699 would take away these abilities.

Especially under the amendment added in the Senate Commerce, Consumer Protection, and International Affairs Committee yesterday which is an attempt to break up the local government/cable company alliance. This insertion would allow cable companies to opt out of their existing franchise agreements if they pursued a statewide one, just as in the case of the new entrants.

As a result, local government lobbyists have taken to arguing that there would be a huge loss of revenue to local governments because of the inability to negotiate local franchises. But this simply isn’t true: the bill provides that the fees can be charged by a local government as much as five percent of the gross revenues of the provider from the provision of that service. In fact, revenues may increase as a result: with these new entrants into the market, the share of the one provider which currently is not subject to any fees, satellite, may go down, while payers of fees may increase.

Stymied here, opponents try to get around this by arguing that providers will try to manipulate the “gross revenues” reported (which, given the way they are defined in the bill, would be practically impossible) or that they will claim they are exempt from the fees because they are “information,” not video, providers (a claim being made in other states that so far has been unsuccessful and which easily could be overridden by changes in law or regulation). At wits end, opponents finally threaten the state with a lawsuit about the loss of local rights-of-way jurisdiction from the opt-out provision they must know they cannot win because of the state general police power (except in the case of pre-1974 Constitution-chartered entities which had to be exempted in the bill).

Again, to understand opponents’ motivations behind these objections, follow the money: local governments like being able to force existing providers to provide certain services, for which then they may take credit from voters even as ratepayers subsidize them, and the ability to pass along certain fees. Losing these powers is really why they protest, but their interests are not compelling compared to the better service at lower cost most, if not all, Louisiana consumers would gain under this bill.

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