Texas Cable Industry Announces Position on HB 3179

Texas Cable Industry Announces Position on HB 3179

TCTA Concerned With Potential New Taxes, Loss of Local Control and Community Redlining By Big Phone Companies

AUSTIN, Texas, April 12 /PRNewswire/ -- The Texas Cable & Telecommunications Association (TCTA), which represents cable companies throughout the state, today announced its position on HB 3179.

TCTA said it opposes a key component of the bill as it is currently written. "Imposing a statewide tax on communications services, including video, satellite, cell phones and land-line phones, is a major shift in public policy and needs further study," Tom Kinney, chairman of TCTA and president of Time Warner Cable-Austin, said. "This would replace local franchise fees and has not been studied well enough to take forward at this time."

Since its inception decades ago, cable has been granted franchises by local communities. The municipalities benefit from this structure by getting franchise fees from the cable operators, which cities use to help fund fire, police and other public needs. There is considerable debate about how high a statewide tax rate would have to reach to replace the income lost to the cities if the local franchise structure was abandoned. The issue is further complicated by the fact that cities across the state have different fee structures for cable franchises. Also unknown is the exact impact on consumers and the prices they would have to pay for these services under the new structure.

HB 3179 would overturn the current system and remove local control of the franchising process. Under the bill, the State of Texas would be in charge of statewide franchising of the operators. "This is a major shift in public policy and should not be undertaken quickly or lightly," Kinney said. "We're very concerned about unintended consequences of such an upheaval -- not the least of which might be hurting local communities' ability to meet their specific needs."

The bill currently includes language that requires all telecommunications companies to be treated equally when they deploy broadband to communities, a position supported by the cable industry. The big phone companies are pushing to change the bill so that it would no longer have the requirement to provide service to all segments of a community.

Late last year, SBC announced plans to build fiber optic networks that will deliver voice, high-speed Internet and television services under an initiative called Project Lightspeed. In reports to investors the company illustrates its plans to target only 5% of "low-value" consumers, while deploying the advanced services to 90% of "high-value" neighborhoods and to 70% of "medium-value" neighborhoods.

"SBC and Verizon want to come into communities and cherry-pick wealthy neighborhoods at the expense of poorer areas. State-sanctioned redlining of poor people is contrary to everything we stand for as Texans," Kinney said. "We hope the legislature holds firm against the big phone companies' lobbying efforts to implement legislation that is bad for Texas consumers."

Kinney said TCTA would be an active participant in the continuing debate on this bill and on other telecom-related legislation currently being considered at the Capitol.

"In order to ensure that all Texans will be able to enjoy the benefits of competition -- including more choices, innovative products and competitive prices, the law should not favor one provider over another," Kinney said. "We'll be watching all bills to ensure our concerns are heard."

TCTA said it is opposed to several other issues currently being debated, including legislation under consideration in the Senate that deregulates big phone companies like SBC and Verizon while at the same time continuing to provide them with hundreds of millions of dollars in subsidies.

TCTA is also concerned about the potential of increased regulation of what are known as "new entrants" to the telephone field. The cable industry is a relatively new player in the telecommunications market, competing with "traditional" telephone companies, as well as other companies offering a wide range of options to Texans.

"Cable has long played a vital role in what people watch on television, and for the past few years, customers have come to rely on cable's high-speed Internet access. With our recent push into the telephone frontier, we are now able to offer customers the choice of inexpensive, dependable phone service via a cable modem," Kinney said. "This transformation has been possible because, over the past 10 years, our Texas cable operators have invested $2.2 billion to upgrade our networks, using only private capital -- no government incentives, subsidies or guarantees."

The Texas Cable & Telecommunications Association represents 29 cable operators from across the state, including Time Warner Cable, Cox Communications, Comcast, Charter and Northland Communications, among others. These cable operators serve millions of customers in Texas. Franchise fees paid by cable operators to local municipalities total more than $220 million per year. These fees help support local police, fire and other municipal services.

Contact: Elizabeth Christian or Meg Meo

(512) 472-9599

Source: Texas Cable & Telecommunications Association

CONTACT: Elizabeth Christian or Meg Meo, both for Texas Cable & Telecommunications Association, +1-512-472-9599

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