Dialing for Dollars
Telecom industry pumps millions into AB 2987.
Thursday, July 6, 2006
On June 19, state Assembly Speaker Fabian Núñez threw out the first pitch at a San Francisco Giants game in AT&T Park. In itself, it wouldn’t be a very newsworthy event—especially since the Democratic lawmaker from Los Angeles doesn’t have much of an arm. But many fear that his recent pitch to the Assembly on behalf of telecommunications giants AT&T and Verizon may be a strike against city governments and community media across California.
Preaching the benefits of healthy competition, AT&T and Verizon have spent millions of dollars to encourage state lawmakers to pass a bill that would allow them to crack a lucrative cable television market. Under the direction of Núñez and co-author Assemblyman Lloyd Levine (D-Van Nuys), AB 2987 easily passed the Assembly 77-0 last month. On June 29, the California Senate Committee on Energy, Utilities and Communications approved AB 2987.
“The change proposed by Sacramento is not right for local government and community media.”
Monterey City Councilman Jeff Haferman traveled to Sacramento to speak against the bill.
“All the television ads from the telephone people say it’s about improved competition,” Haferman says. “Most of us that work in cities think that this is an advertising gimmick. We’re all for competition, but it’s hard for me to understand how this bill will do it.”
What is easy to understand, however, is that the telecom industry is working overtime to push lawmakers to support AB 2987, providing them exposure and hefty campaign contributions.
Recent full-page ads in the Los Angeles Times and other newspapers thanked Núñez for moving the bill. Last spring, AT&T sponsored a Núñez-headlined golf fundraiser at Pebble Beach, raising $1.7 million for the California Democratic Party. And Gov. Arnold Schwarzenegger has received $374,000 in campaign contributions from the telecommunications industry.
“Núñez is smart and young, but he’s a wheeler and dealer,” Haferman says. “He’s a politician. He’s powerful and he’s got Schwarzenegger behind him.”
Núñez did not return calls for comment.
AB 2987 would likely bring AT&T and Verizon billions in future revenue. But city leaders warn that it would cost local governments millions of dollars in lost franchise fees, hamstring their ability to resolve utility conflicts and threaten the existence of community media like Access Monterey Peninsula.
“First of all let me say that the pace of the evolution in technology and the tech marketplace has far outstripped our telecom policy and regulatory framework,” says Monterey Assistant City Manager Fred Cohn. “I’m the first to admit that what we have is broke and needs to be fixed from a regulatory perspective. But the change proposed by Sacramento is not the right kind of change for local government, communities and community media like AMP.”
Under AB 2987 cable licenses would be issued by the state to companies seeking to enter the cable television business. This would replace the current process, which requires companies to obtain a franchise from each city and allows local governments to negotiate directly to get the best deals for their regions.
Traditionally, cable companies have been regulated locally, under federal law, while phone companies have been regulated at the state and federal level. In recent years, however, the lines between cable and phone services have blurred. Cable delivers phone service and phone companies deliver Internet, DSL, and video services. Phone companies argue that they get a raw deal.
Cohn says it’s good policy to level the playing field, but he doesn’t want to see cities lose money—franchise fees—in the process. He says AB 2987 takes too much control away from local government and sets the bar too low for the operators to meet the needs of the community.
“The Verizons and AT&Ts of the world don’t want to go community by community to get these franchises like the cable operators had to,” Cohn says. “But public airways and public streets and right of way are valuable. If a commercial company wants to use these then the community is entitled to something like a rent.”
Still, Cohn says a reduction in franchise fees is the least of his concerns about AB 2987. In its current form, the legislation would impact local governments’ ability to dictate where cable coverage must be, which could leave some areas without service.
In addition, Cohn says that AB 2987 would eliminate the current franchise agreements that Public Access Media like AMP have with the incumbent providers, which traditionally have provided Public, Educational and Governmental (PEG) access channels and funding as part of the franchise deal.
“This legislation does these things at a much lower level than what they do today in Monterey,” Cohn says. “This bill would severely affect resources PEG access needs—things like equipment and facilities, staff and resources.”
Plus, Cohn says the bill would change the lucrative deal the city has with Comcast to provide an affordable connection for its I-Net. The city’s I-Net (Institutional Network) connects the schools, public facilities, Monterey Salinas Transit, state parks and facilities like the Defense Language Institute.
“We get far greater capacity than we could ever afford at market rates,” Cohn says. “We’re basically getting gigabyte speeds for $55,000 less a year. The money we would have to spend on I-Net would be money we didn’t have for schools, other things.”
Additionally, critics are concerned that AB 2987 would remove local authority to regulate the quality of customer service and resolve right of way disputes among the utility companies.
According to Cohn there’s a simple resolution. Local governments would provide the phone companies with a franchise in 90 days if they agree to meet the same standards as the incumbent.
“It’s not as hard as they would have you believe,” he says.