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A Fight Over Video Services:
Rein in prices by keeping tough local regulation

Nicholas Johnson

Des Moines Register, April 12, 2007, p. OP9

Qwest can already offer cable-television service. But it wants more.

It wants to write the rules, and with state, not community, franchises.

So it gave over $79,000 to Iowa legislators during 2005-06. Its industry PAC gave another $86,000. And the Iowa Senate gave the company what it wanted.

We don't assume anything's amiss. We trust our legislators. But we also follow President Ronald Reagan's advice: "Trust, but verify."

Why tilt the playing field to favor one industry?

Because, we're told, the bill's good for us. Competition lowers prices. Really? Qwest lobbies legislators to reduce its prices and profits? I don't think so. As AT&T's CEO told Wall Street, "it's going to be a war of value and services," not prices.

The data are slightly mixed. But most show it's tough local regulation, not competition, that lowers prices -- the very regulation this bill undermines.

North Liberty has telco competition. Iowa City doesn't. Yet Iowa City's locally regulated cable rates are lower.

A study of Chicago-area cable services found no significant impact on rates from telco competition. Another found the same in Texas.

Not only do Iowans gain nothing from this bill, they also lose. Qwest gets to end-run regulation by Iowa's cities. Then the bill lets cable companies cancel their local franchises and ask for equal treatment.

Qwest says getting franchises from cities is burdensome. But most Iowa cities use Mediacom's model franchise. All Qwest would have to do is cross out Mediacom's name and insert its own.

As a Federal Communications Commission member, I played a role in writing some of the few consumer protections provided by local regulation.

Cable companies usually have to wire the whole town. This bill could let telcos choose the neighborhoods they want.

Cable companies pay Iowa's cities franchise fees based on revenues. So will Qwest -- but it wants to exclude its advertising revenues.

Moreover, contributions for public-access channels' operating expenses, such as the $319,000 Mediacom gives Iowa City, will apply to Qwest for only a limited period, then disappear. Qwest won't have to pay anything more than its reduced franchise fee.

Why are Cedar Rapids' basic rates increasing 55 percent, while Iowa City's will probably remain lowest in the state? Tough local regulation.

And who will protect those who can barely afford "basic" rates now?

Iowa's cities have negotiated franchise benefits. They will lose them two ways. (1) Quest's "state franchise" probably won't require these benefits. (2) Then Mediacom can cancel its local franchise and opt for the same terms from the state.

Mediacom offers almost all cities free cable and Internet connections for schools, libraries and city offices. Gone. Production services for city council meetings. Free or reduced-cost informational PSAs from the city. Direct city access to the Emergency Alert System. Financial support for broadband city networks. All gone.

It's all something for members of the Iowa House to think about before they vote on this bill -- and they also "Trust but verify."

NICHOLAS JOHNSON,, is a former FCC commissioner now teaching at the University of Iowa College of Law.