Wrong Number

May 7, 2007

In Texas, SB 5 was the legislation that opened the telecommunications arena for fuller competition, particularly in video. It allowed for statewide franchising of video offerings, thus avoiding many of the pitfalls of having to go to each individual jurisdiction for permission to build video plant. The cable companies fought this bill with heavy infusions of cash to lobbyists (well over $600,000 from one association and over $500,000 from one cable company.)

This law was passed in 2005, and although the Texas cable companies are operating very successfully under this bill and their representatives have made public statements about how great the current atmosphere is for the customer, they (the cable companies) are still suing over this law! The following, recent editorial in the Fort Worth Star-Telegram (April 7, 2007) points out, "Perhaps it is time for the cable people to admit they called the wrong number when they fought SB5."

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"Wrong Number"
Apr. 07, 2007

During 2005's Texas legislative session, cable companies worked hard to disconnect Senate Bill 5, the proposal that set up a massive restructuring of the telecommunications business in Texas.

Companies such as AT&T and Verizon are in the video business today because of this bill, which has served as a model for deregulating phone service in other states.

The Texas Cable and Telecommunications Association spent $685,000, and Time Warner Cable spent $505,000, on lobbyists to try to derail the bill by convincing lawmakers and consumers that it was bad for Texans. Verizon and SBC (now the new AT&T) spent buckets more to convince lawmakers and consumers that it was good for Texans.

If nothing else, the fight produced some great advertising sales.

The phone company folk prevailed, primarily on the fine American tradition of arguing that “competition is good."Before Gov. Rick Perry's signature was dry on the legislation, the cable association sued – a not-so-fine

American tradition – claiming unfair treatment for the industry. The lawsuit was bounced in September 2006 by U.S. District Judge Lee Yeakel in Austin, who determined that it was way too soon to prove injury.

The TCTA appealed to the 5th U.S. Circuit Court of Appeals, where the case awaits action.

It is interesting to note that the cable companies, while continuing litigation against SB 5, are rolling out phone services and high-speed Internet offerings made possible by SB 5.

“It's an exciting time in the industry,” Kevin Allen, director of government relations for Charter Communications in Texas, told the Fort Worth Business Press last month.

“There are a lot of offerings out there because of the competition. There are still some aspects of the law that we in the cable industry don't feel are fair, but we're out there competing and doing well. The real winner has been the consumer, no doubt about that.”

Perhaps it's time for the cable people to admit they called the wrong number when they fought SB 5.


For more information contact:

Dr. Paul Polishuk
Information Gatekeepers Inc.
320 Washington Street, Suite 302
Boston, MA 02135
617-782-5033, Fax 617-782-5735