This week, the U.S. Senate Commerce Committee approved the Communications, Consumer Choice and Broadband Deployment Act of 2006, sponsored by Ted Stevens (R-Alaska) and Daniel Inouye (D-Hawaii). If passed by the full Congress, this massive telecom bill will bring consumers significant benefits, especially long overdue cable franchise reform.
New technologies have made it possible for broadband providers to compete with cable’s video services by offering television over the Internet, also known as “IPTV.” Unfortunately, the current system of cable franchising allows local government bureaucrats to make it difficult for cable competitors to enter the market. Stevens’ and Inouye’s bill would change that and open up the marketplace.
More competitors mean more choice, better quality and lower prices. In states where local lawmakers have already passed reforms, the results have been stunning. This has led to a movement in state legislatures across the country to approve cable franchise reforms. Even California’s leftist Democrats, such as Assembly speaker Fabian Nunez, understand that less government control would increase choice and deployment. It would also increase tax revenues.
Brookings Institute scholars Robert Crandall and Robert Litan recently calculated that local government revenues from cable franchise fees would actually increase more than US$400 million due to competition. The reason is that although consumers would be paying 13.5 percent less for cable than they are now, subscriptions would increase between 29.7 and 39.1 percent. However, cable reform isn’t the only key item in the Stevens and Inouye bill. It also takes a rational approach to the issue of net neutrality.
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