Business VoIP

One always ought to take a skeptical – skeptical, not cynical – view of claims that any particular governmental policy is “harming the public interest.” The reason is simply that for every claimed “public” interest, there is a corresponding private interest. Some people think only businesses are “private interests.”

 

In fact, all citizens, workers, consumers and industries have private interests, and press claims for those private interests, in the name of the public interest. Teachers unions exist to prop up wages for teachers. The American Medical Association performs the same function for its members. In fact, for every “public” purpose, there is a corresponding need to claim resources generated solely by people and businesses operating in the private economy.

 

Ultimately, all jobs and employment are created solely by the private sector, in the sense that every government job is created solely by tax revenue paid by private sector individuals and businesses. So one ought to be skeptical when organizations, speaking in the name of the public interest, criticize government policies that are seen to harm their private interests.

 

Recently, The Alliance for Community Media polled its members about the impact of state video franchise laws on “public, educational and governmental access TV” services. PEG requirements are a legacy of the 1980s urban cable TV franchise wars when contestants felt they had to shower all sorts of goodies on municipalities for the right to obtain an exclusive franchise.

 

Some 204 respondents representing public, educational and governmental access television centers participated. Of those respondents, 140 now have a state video franchise law in effect. Looking just at responses from PEG personnel who operate under statewide franchise laws, about 20 percent of respondents report PEG funding decreases since the advent of statewide franchising.

 

In many communities, PEG funding that had been available for all PEG-related costs is now restricted to capital purchases.

 

Respondents from 17 communities in 8 different states report loss of access to PEG facilities managed by cable operators soon after state video franchise laws removed local obligations from those companies.

 

In addition, Comcast (News - Alert) used state franchise law as the excuse to close all of its PEG facilities in northern Indiana and southwestern Michigan in September of 2007, prior to distribution of this survey.

 

About 26 percent of respondents that had public cable drops (provided free of charge) in locations like libraries, schools and other public centers, and 41 percent of respondents in communities that had an Institutional Network (provided free of charge) connecting government facilities, educational institutions, and PEG facilities report the loss or reduction of those benefits.

 

About two-thirds of affected survey respondents from 13 states report that new state franchise service providers deliver PEG channels with impaired signal quality and functionality. For example, AT&T’s (News - Alert) “U-verse” system takes up to a minute or more to tune in a PEG channel and presents PEG channels at inferior quality compared to commercial channels.

 

Others report that PEG channels cannot support closed captioning or second audio programming or do not support DVR recording of PEG channels.

 

Since the passage of state video franchise laws, PEG centers report reductions and threats to their existing channels. Operating under recently-adopted state rules, many new entrants and incumbents quickly took steps to limit PEG channel capacity and placement.

 

Nearly 25 percent of respondents said they lost or expect to lose channels since the advent of statewide franchising.

 

Respondents from 29 communities in 12 states report PEG channels being moved by incumbent cable operators to “digital only” channels, decreasing accessibility and visibility and increasing costs for subscribers.

 

Respondents from eight states report that they must purchase special hardware and pay significant monthly fees to deliver PEG channels to new state franchise service providers.

 

Such carriage fees were never required previously under local franchises, and are not paid by local commercial and public broadcast stations.

 

Two-thirds of respondents said basic cable rates have increased in their communities after a state video franchise law was adopted and a new competitor arrived. Only 1 percent said that rates have gone down.

 

No doubt, all this is true. The public policy question might be answered by each of you: do you watch any PEG channel? Does anybody you know watch PEG? In the age of abundant Internet content, is there the same need for PEG as there might have been 30 years ago?

 

The observation about cable rates is more troublesome, but has nothing to do with franchising rules, and everything to do with the cost of programming. Analysts say a handful of channels providing sports programming are the primary drivers of cost.

 

Cable operators all say the same, so policymakers have floated the idea of a la carte programming to allow consumers to opt out of the expensive sports channels. Whether the remedy is workable is another question.

 

The other observation is that competition in the entertainment video business tends to take the form of “more choice, better quality” rather than “lower price,” much as airlines competed in pre-deregulation days. The simple problem is that it is tough to compete on price without limiting access to the channels people actually want to watch.

 

Financial support for channels nobody watches, and mandated of video providers as a condition of operating, does not contribute to lower costs. To be fair, even eliminating the PEG requirement would not likely lead to a lowering of costs.

 

Given the apparent emotional tie viewers have to their favorite programs and channels (especially live sports), it is not clear what can be done about programming costs for the most-popular channels.

 

It isn’t clear how much money and time to market service providers save when statewide franchises are possible. Certainly there is room for some loss of revenue to municipalities, which also object to statewide franchises, for obvious reasons.