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California Moves One Step Closer to Cable Deregulation

California Moves One Step Closer to Cable Deregulation
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Jun 1, 2006 2:00 PM PDT    Text size: 
SACRAMENTO, Calif. — Adult content providers may soon have more cable distribution options after a unanimous vote in the California Assembly, which passed legislation that could dramatically reshape the marketplace for the state’s cable providers.

The 70-0 vote marked a victory for telecommunications companies like AT&T and Verizon, which had lobbied the Legislature to drop so-called franchise deals that effectively allow a cable company to lock up a given geographic area under the existing legislative regime.

Under the proposed bill, which now will go to the Senate, telecom companies will be able to bypass local governments and apply directly to the state for a cable license.

Assembly Speaker Fabian Nunez, who sponsored the bill, said that the law is about creating a “level playing field.”

In support of the bill, AT&T commissioned a study by UC Berkeley professor Yale Braunstein, who predicted that consumers in the state could realize nearly $1 billion in savings if telecoms entered the market.

According to California AT&T President Ken McNeely, most of the savings would come from consumers taking advantage of so-called bundling options, which would allow them to purchase cable, Internet and phone services from the same provider.

However, cable companies have complained that the bill would give too much leverage to telecom companies, likening the bill to California’s controversial energy deregulation plan and the subsequent energy crisis.

“There we had brownouts, and we realized that it was not entirely a competent job of trying to deregulate the energy industry,” said Dennis Mangers, president of the California Cable and Telecommunications Association. “And if we're not very careful with this bill, we could screw up another whole field of important public policy, in this case telecommunications and video.”

Meanwhile, consumer advocacy groups also have sounded the alarm in response to the bill, fearing that telecom companies would be able to pick and choose the very best neighborhoods while saddling cable companies with costly infrastructure to service only poorer communities.

“A bipartisan, late-night deregulation effort should warrant serious concern by the public because it was not crafted for consumers but by, for and of the telecom giants," Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, said.

But Nunez was adamant that competition would be a boon for consumers.

“At the end of the day, consumers will keep some of their hard-earned dollars because we have created competition in a market where there was none," Nunez said.

If and when the bill passes the Senate, it will need approval by Gov. Arnold Schwarzenegger, who has not yet taken a position on the proposed law.

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