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Cable bill seeks to end local govt revenue-raising scam

The only thing that has changed in the two years since former Gov. Kathleen Blanco vetoed HB 699 is that this year’s SB 422, largely duplicative of the 2006 bill, is almost certain to be signed, if it makes it to him, by Gov. Bobby Jindal. If so, finally Louisiana cable consumer will have price relief even as local governments complain at the loss of a backdoor way to extract funds from their citizens.

The bill does many things, but most importantly it creates a statewide franchise, rather than local franchise, for cable provision. Local governments have manipulated this franchising power for many years, forcing providers into expensive operations which created a virtual monopoly situation as these requirements made it prohibitively expensive for new market entrants. These governments then took advantage of the situation as they legally could use franchise fees paid by consumers as a form of indirect taxation on them, and would do little to discourage the monopolistic cable television providers from raising rates since the franchise fee take would go higher as well. This is why many studies (not just the one released in conjunction with the bill) confirm the benefits of the arrangement in the bill include lower rates.

In terms of content of argumentation, nothing has changed, except that two years ago the cable company/local government alliance tried to sell opposition, laughably, that a decrease in competition would occur, obscuring their real motives that it was all about money (which I laid bare then). They displayed no such pretense yesterday in Senate committee hearings, but their whining about loss of revenue was again wanting – lower rates would increase usage and may offset any potential loss through volume.

Again, however, some pretense is involved. The real concern of local governments is that they cannot control rates, not only because there will be a greater chance of competition, but because the state now will have that authority, thus they cannot squeeze ratepayers at will. And high comedy was provided when their representatives asserted they, in fact, were all in favor of competition by trotting out the fact that a hundred local governments had passed resolutions asking for more providers to enter the market – but attached to a “model” agreement or something similar that was so heavily biased in favor of existing providers’ desires and the local governments that no competitor who wanted to make money would sign on to it. Not surprisingly, none have.

Another old, vetted argument trotted out against it was somehow gross revenues on which the (maximum) five percent fee would be returned to local governments would be manipulated to reduce it. But the bill’s wording makes this practically impossible, and no doubt if there is any genuine concern here, the bill can be tightened on the floor (it passed committee).

Two years ago, the cable television/local government alliance’s tactics were to cry foul on competition matters to hide the fact they wanted to be able to extract more money at their own will out of consumers. Now, the tactic is to complain they somehow won’t get a “fair” share, which still cloaks the fact that now it continues to be about that power of extraction. Exercising this power pits consumers against local governments, and while last time consumers lost, signs are good this time state policy-makers are going to make consumers the winners.

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