Cable industry and cities have vigorously opposed the legislation
By SUDEEP REDDY / The Dallas Morning News
In a major victory for the two largest phone companies, the Texas House passed major legislation Sunday to create greater competition for the cable television industry and ultimately transfer authority for TV service from cities to state regulators.
WHAT'S AT STAKE
The telecom legislation would:
Allow phone companies to receive statewide franchises for their new TV services, bypassing city governments.
Deregulate basic phone rates, allowing phone companies to raise prices.
Let electric utilities deliver broadband Internet service over their power lines.
SBC Communications Inc. and Verizon Communications Inc., armed with a bevy of lobbyists, sought the controversial measure to ease their entry into the TV battleground.
Both companies plan to roll out Internet-based digital TV services this year, part of a heated battle with cable companies to offer the so-called triple play of phone, TV and Internet service through a single provider.
The cable industry and city officials strongly fought the measure, arguing it gives phone companies an unfair advantage, strips consumer protections, and wrests control and revenue from cities.
The legislation allows the phone giants to receive statewide franchises for their services instead of going through lengthy negotiations with individual cities, as the cable industry has had to do for decades.
"Consumers should have another choice if they're unhappy with their existing providers," said state Rep. Phil King, R-Weatherford, the House's leading proponent of the measure. "This bill allows more companies to provide more service to more consumers."
The House passed the bill 135-6 after a two-hour debate focused largely on whether phone companies would discriminate by targeting the most affluent customers.
Phone companies say an emerging technology shouldn't be forced to follow the same rollout requirements as cable faces now.
The legislation passed the Senate 25-3 last week but requires approval again by the upper house because of minor changes. Its passage could hinge on the progress of school finance and tax legislation, the primary purpose of the special session that ends Wednesday.
The telecommunications bill, one of the biggest business issues in Austin this year, failed to clear the regular session that ended in May.
Gov. Rick Perry added the issue to the session's agenda last week.
The legislation also allows phone companies to raise rates in the largest communities.
Once state regulators certify that adequate competition for phone service exists, rates in smaller regions can be raised.
It also allows electric utilities to deliver broadband Internet service over their power lines, a technology that's intended to bring high-speed Internet access to rural areas.
In the video provisions, the bill allows phone companies to receive statewide franchises for TV services within a month, instead of as long as 18 months that they'd need at the city level.
Cities would maintain their existing franchises with cable operators, with phone companies operating under the same franchise-fee structure until the local cable franchises expire.
Ultimately, cities would yield control over cable service to state regulators, which could receive complaints from customers but not take action against the companies.
several lawmakers have objected to the Legislature's fast-track handling of the phone measure while failing to make progress in helping public education or lowering property taxes as promised.
Referring to the Senate bill's number, SB 21, Rep. Harold Dutton, D-Houston, said the legislation gives SBC "special-interest rules."
"This bill is such a hand-over-fist giveaway that we really ought to call it SBC 21," Mr. Dutton said.
Companies on both sides have sparred over rising rates of their competitors.
Phone companies cited rising cable prices over the years. The cable industry warned of price increases for phone service, noting SBC's higher prices for features such as caller ID and speed dialing after their deregulation.
Level playing field
"Consumers benefit when there is a level playing field," Time Warner Cable-Austin president Tom Kinney, chairman of the Texas Cable & Telecommunications Association, said Sunday. "This legislation gives every economic and regulatory advantage to big phone companies."
Lawmakers cited an economist's projections that the bill would create12,000 jobs in the state and spur $1.8 billion in annual investment and spending.
Steve Banta, Verizon's Southwest region president, said the company hoped to "soon bring a new option for consumers who have been held captive by cable TV companies for too long."
SBC Texas president Jan Newton said Sunday that the House passage "demonstrates that this issue continues to center around Texas consumers and the need to provide them with more choices and competitive prices in TV and entertainment."
Copyright 2005 The Dallas Morning News Co.
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