July 14, 2005
Senate passes telecom bill

Almost as fast as you can say "Telecom bill added to special session agenda", that bill got passed by the Senate.

Approved 25-3, it allows phone companies to get a TV franchise from the state rather than require them to go to each city for a franchise, which cable companies have to do under existing law.

The bill also allows phone companies to offer TV service in only the areas in a city they choose to serve.

Current law generally forces cities to require cable-franchise holders to offer service to all homes. Companies that receive a state franchise would be required to pay a fee based on their gross revenues and would be subject to other requirements.

Agreements between cities and companies would remain in effect until they expire.


The bill also addresses telephone rates and lets phone companies in areas with populations of 100,000 people set their own phone rates if the service is packaged with other services, such as call waiting.

Phone companies could start offering their own rates in suburban markets in 2006 as long as there are three other competitors in the area.

The Public Utility Commission would have to determine whether rural areas are competitive before phone companies could set their own rates there.

Companies would be required to reduce their local access rates charged for long-distance telephone calls within Texas from 6 cents per minute to 1 cent per minute, though the reductions will take place during several years.

The Statesman story goes into some detail about opposition to this bill.

[Voting against Fraser's bill] were Sens. Kip Averitt, R-McGregor, Jon Lindsay, R-Houston, and Bob Deuell, R-Greenville.

They raised concerns including the financial impact on cities that rely on cable franchises for millions of dollars in revenue and what they said were unfair advantages for big phone companies. They also said the Legislature was needlessly rushing to act on a complex issue that needed more research.

"I am concerned that the Senate hasn't had enough time," Averitt said. "I think there are issues here that need to be fully vetted out."


A statewide association representing Time Warner Cable Inc. and others said the legislation will let phone giants cherry-pick the most affluent customers for their new television ventures instead of providing service communitywide as cable providers are required to do.

"Texas taxpayers are on the losing end of this massive lobbying campaign by SBC and Verizon (Communications Inc.)," Tom Kinney, chairman of the Texas Cable & Telecommunications Association and president of Time Warner Cable Austin, said in a statement.

He said the legislation would allow phone companies to "redline and divide communities" on television service. Kinney also said phone rates would rise under the proposal, while allowing SBC and other phone companies to hold on to several hundred million dollars a year in state subsidies for phone service in rural areas.


On Tuesday, the mayors of Austin, Dallas, Houston and other large Texas cities sent Fraser a strongly worded letter opposing the legislation, saying that it will reduce city revenue from franchise agreements and allow SBC and other new providers to offer service only in affluent neighborhoods.

Texas cities remain opposed, but a spokesman for a statewide coalition said Fraser's legislation is an improvement over earlier proposals.

"Do I wish we weren't headed that way? Yes," said Frank Sturzl, executive director of the Texas Municipal League. "But I think that the handwriting is on the wall."

Here's that letter from the Mayors (PDF). They complained about the swiftness with which this bill was approved (they want to have more discussion and a "comprehensive study" of the bill's effects), and an "escape hatch" in the bill (they referenced section 66.016 of Senate Bill 21) which would allow the telcos to "completely remove themselves from the application of a statute for which they are lobbying".

The good news, according to Save Muni Wireless, which expressed similar concerns as the mayors, is that the dreaded anti-municipal broadband provision was not in this bill. However, they say "having the bill in play raises the risk of amendments, as we saw in the regular session". I think that's unlikely to happen at this point, but nothing is ever certain in the waning days of a legislative session. Barring anything strange, look for SB21 to get adopted by the House today.

Posted by Charles Kuffner on July 14, 2005 to That's our Lege | TrackBack

Oh, man. What an SBC wish list. Can you say, "uneven playing field?" I knew you could.

The only good thing in the bill is this part:

Companies would be required to reduce their local access rates charged for long-distance telephone calls within Texas from 6 cents per minute to 1 cent per minute, though the reductions will take place during several years.

That sky-high access charge has made it impossible to get reasonable long-distance rates in Texas from anyone other than your local phone company. So it looks like long-distance will eventually go down, thanks to improved competition. But local rate increases will more than compensate for all but the heaviest long-distance users.

Posted by: Mathwiz on July 16, 2005 5:47 PM