USA - video services regulation

Impact of State Video Services Legislation

The National Association of Telecommunications Officers and Advisors (NATOA) today released results of a preliminary survey it conducted among its members to obtain a snapshot of the impact state video services legislation has had to date on communities and subscribers. While state video franchising is still a relatively new concept, the survey posed questions regarding its effects on competition, rates and services, PEG (Public, Educational and Governmental) access, and consumer complaints. Responses came from 14 of the states which have adopted state video legislation. A total of 139 Local Franchising Authorities (LFAs), representing 10 million cable subscribers (15% of cable subscribers nationwide), participated in the survey.

The results of the survey indicate that incumbent cable providers are taking advantage of the change in law, with one third of respondents indicating that the incumbent had abandoned its local franchise for one issued by the state. New entrants are seeking only state franchises. In franchise areas affected by state legislation, 27% of participants report one new entrant, and 6% report more than one new entrant in operation. Thirty-five percent (35%) of LFAs report the new entrant has not built anything; 48% report the new entrant has built out to part of the community; while only 18% report that the new entrant is in the process of or has built out to the entire community.

As a result of these changes, NATOA was disappointed to learn that under state legislation thus far:

* Rates have not decreased according to 98% of those surveyed.
* Incumbent basic rates have increased $1.12 for analog and $1.51 for digital
* Most new entrants do not market a Basic Service Tier nor report rates, which makes consumer comparison shopping difficult at best.
* Consumer complaints remain high with 74% of respondents reporting the same level of complaints, except as they relate to the availability of choice of provider
* The majority of LFAs reported that on incumbent systems, the number of PEG (Public, Educational and Governmental) access channels has remained constant (97%) and that the technical quality has remained the consistent (89%). PEG channel positions on new entrant systems were reported as different from the incumbents by 39% with worse or poor technical quality reported by 36% on new entrant systems. PEG funding was the same for 44% of the LFAs, whereas funding increased for 12% and actually decreased for 22% of respondents.
* Overall, 82% of LFAs do not believe that state video legislation is having a positive impact on their community; 90% believe that PEG programming is not being treated in an equitable manner by new entrants; and 97% believe that customer service has not improved under state supervision.

“We were anxious to get this first snap shot and to set the bar against which future data can be collected and judged,” said NATOA Executive Director Libby Beaty. “Clearly, this legislation is very new in many places, and only time will tell whether, once implementation is complete, it will prove to have benefited consumers more than the corporations that sought the legislative changes. We are hopeful that it is the consumer who will win, but clearly it’s too soon to see those benefits yet. State legislation just out of the gate is not resulting in price reduction, the primary reason used to justify state over local regulation.”