Sunday TV and cable regulation

I've been wondering about the recent commercials calling for the liberation of television providers in Missouri. I hadn't realized the industry was so repressed.

I caught one of the recent commercials on Sunday. It pointed the curious towards a website, FreedomWorks.org. As it turns out, FreedomWorks is a conservative group based in D.C. and headed by former Rep. Dick Armey (R-TX). The group is supporting similar actions in Kansas, Indiana and three other states. The telecom biz may be a new area given that the majority of their energy is directed towards issues such as TaBOR, flat taxes and school vouchers.

The ads support legislation sponsored by State Sen. John Griesheimer (R-26) and co-sponsored by Sen. Maida Coleman (D-5). Rather than require providers like Charter Communications to obtain franchises from each city served, the bill would create a single, statewide franchise for video service providers. The argument is that the effort in obtaining multiple franchises discourages providers from entering the markets.

Certainly multiple contracts are a headache, but do real barriers to market entry exist?

A story in the St. Charles County Business Journal states that threats of legal action against St. Charles spurred the legislation. Charter threatened to sue is the city signed an exclusive contract with AT&T. Charter currently has a non-exclusive contract with the city.

Threats of legal action count as a substantial barrier, but does the creation of a single, statewide franchise go further than necessary? Couldn't legislation requiring equal access to all municipalities achieve the same goal and retain local oversight?

The 1984 Cable Act allows cities to exact some control over the operators through the granting of franchises. Breaking the near-monopoly cable providers have may introduce the self-regulation pro-market individuals envision.

Government oversight has its problems, of course. Missouri's Public Service Commission (which would oversee the statewide franchise) has had a rocky period recently, as anyone following the Laclede Gas's billing program changes could attest. Yet in dealing with a monopoly or an oligopoly, only government can provide the proper oversight.

One of the major complaints from FreedomWorks (whose major focus is the reduction or elimination of taxes) and providers is that municipalities exact fees of up to 5% of gross receipts. The St. Louis City budget projects $1.6 million in revenue from such fees in '06. The department charged with enforcing the franchise (which includes testing lines and fielding complaints), the City Communication Department, had an actual budget of $1.6 million in '04 and a projected budget of $1.2 million in '06. For St. Louis the fees are not a source of profit, they fund the oversight required by the franchise.

Currently, cable companies are required to support community access channels. The proposed legislation would only ask the companies to attempt to provide access, or explain why they couldn't. That quirky, low-budget spot low on the dial has its uses. In areas like Festus, the school board airs student-produced programming on the local community access channel. In St. Louis and other communities, the governments broadcast meetings, events and informational spots.

The bill is currently working its way to the floor of the Missouri Senate.

Update: In news related to my post, the chairman of FreedomWorks, former Rep. Dick Armey (R-TX) will be speaking at a Show-Me Institute luncheon on Tuesday. Armey's talk will address State Sen. Griesheimer's bill and the future of telecom in Missouri. The luncheon will be held at the Capitol Plaza Hotel at 12:30pm.