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May 19, 2003 Senate Committee on Dear Chairman McCain, Senator Hollings, and Members of the Committee: We thank the Committee for holding what we hope will be the first
of several Congressional hearings to address cable competition,
pricing, customer service and related issues. Local governments
welcome the opportunity to share with the Committee our experience
as cable regulators, public right-of-way managers, and community
interest advocates. At the close of the May 6, 2003 hearing on Competition
in the Market for Video Services, Senator Burns indicated that the
record would be left open and that parties were welcome to offer
comments. On behalf of the undersigned representative associations
of local governments, we therefore submit this testimony for the
record to provide the Committee with a ground-level assessment of
how current rate regulation and competition policies are working,
and to clarify the nature and importance of local governments’
role in promoting competition and protecting cable and broadband
consumers. Local governments were disappointed that the Committee’s hearing
did not include a witness representing local governments, particularly
since local governments are the government entities responsible
for reviewing cable operator rate filings and approving or modifying
cable operator selected rates as part of the federal rate regulation
regime. Moreover, as the regulatory agency closest and most accessible
to consumers, local governments receive daily input from subscribers
regarding rates, billing and the general performance of cable operators
and broadband service providers, and we work daily with these industries
to resolve a wide range of consumer issues. Nevertheless, local
governments renew our pledge to assist the Committee in any way
we can to address the Committee’s concerns as well as the cable
issues outlined in our testimony. We draw the Committee’s attention to what we think is the
primary explanation for the continued escalation in cable rates,
namely, the lack of wireline competition for cable providers. Local
governments have used their authority to promote competition and
deployment, strengthen consumer protections, and facilitate viewpoint
diversity and localism in video programming. In contrast, cable
operators are using their market power to drive out video programming
competitors, are refusing to run advertisements from DSL competitors
on their cable systems, have attempted to infringe on the privacy
rights of consumers, and are using exclusive contracts to deny competitors
access to local origination programming. Contrary to the testimony
of the May 6th cable industry witnesses, there is no evidence that
cable operators will limit rate increases if they obtain more control
over cable programming through á la carte pricing or other
forms of deregulation. We remind the Committee that cable operators
used á la carte tiers in 1994 as a means of evading rate
regulation. Without meaningful competition or effective rate regulation,
the cable industry will not voluntarily lower rates. Local governments also urge the Committee to consider additional
oversight of the FCC. As implemented today, FCC rate regulation
rules do not ensure reasonable rates, despite the continued congressional
mandate to do so. Furthermore, we believe that misguided FCC interpretations
and inaction have thwarted local government efforts to make effective
use of the rate regulation process, such as it is. Finally, local
governments are deeply concerned that if the FCC does not act to
curb current market power abuses by incumbent cable operators, wireline
competition for video programming and broadband service will be
irreparably harmed. We urge the Committee to work with local governments
to protect subscribers from unreasonable rates and to promote continued
growth of wireline competition in a manner that respects the sovereignty,
property rights and important regulatory role of local governments.
Sincerely, |
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