Friday, February 6, 2009

Psst...I'm Your Cable Company

Response to Press Coverage of State Video Franchising Laws


Psst. I’m your cable company. I got your town’s cable franchise about thirty years ago—it’s the only way I could use taxpayers’ land, you know that nine feet on each side of every road. To get into the cable business, I had to pay a 5% gross revenues franchise fee and another 3% for public, education and government access. It was a ‘have-to thingy’ back then—my paying 8% of gross in fees, access channels, equipment, training staff and institutional networks—so I could win the competition to use those dumb taxpayers’ land. They wanted the access stuff for a local network—for boring programs nobody watches like small town news, kids soccer games, council meetings, emergency alerts and saving money on cop communications. Hey, you do what you gotta do to win.

Now, get this fun part. In ‘84, I got together with my buddies, before we even got towns wired. By the way, we really rocked hanging cable—passed every home in the U.S. metro areas in about five years. Pretty impressive, huh? Anyway, after all the cable deals were cut, we wrote a law for Congress that let us pass our lease costs on to subscribers. What could be better—we got Congress to make taxpayers pay us to lease their public land. We cable guys have been celebrating big time ever since. My stockholders went ballistic with joy. Hope you bought some stock.

This is how it works. We get to list our lease costs right on cable bills so it looks like a TAX. Voila, like magic we get an automatic rate increase of 5% of gross revenues annually—in perpetuity. We don’t have any competitors to speak of. We own the satellite guys, too—and we have few costs since we mostly buy our cable programs from ourselves—we keep as much as we can in house.

But the best part is our customers get mad at government for charging us to use their land. AND nobody can stop us. LOL. (Laugh Out Loud in text-ese).

In ‘92, we got Congress to pass another bill that let us put the rest of our lease costs on subscribers’ bills. Now, we get to list public, education and government access lease costs right on subscribers’ bills on top of the 5% franchise fee. Bonus: customers get even more furious at local government for raising taxes. Isn’t this fabulous?

Almost thirty years with no regulation, no land lease costs, no competition—profits through the roof—second only to oil companies. Life is good.

Fast forward to now. Get this. Digital and Internet converge—phone and cable carry the same services. So now we get in bed with the phone guys. We go state by state to pass laws that get rid of local cable franchises completely—because we’re sick and tired of dealing with those local yokels constantly whining about upgrading to fiber, rate increases, customer service, giving everyone access, yada-yada-yada. Talk about butt-in-skees.

You know what else? Those dummy governments in Europe and Asia put in fiber networks that carry 100 Mbps high-speed Internet to meet increased demand for broadband—like high definition TV. They only charge forty bucks a month for 100 Mbps Internet carried on fiber to the home. How profitable is that?

Then, these overseas governments have the nerve to force telecom companies to compete with each other. On the other hand, here in the U.S. me and my telecom buddies successfully keep government out of our business. Comparatively speaking, we spend virtually nada to upgrade our copper networks. We even got the feds to call 200 Kbps—high speed Internet which is thousands of times slower than Mbps fiber service. How sweeeeet it is.

Oh—let me tell you about our high tech financial innovations. When we do get around to upgrading copper plant for a modest investment, it carries about 5-10 Mbps Internet on a good day. AND we still charge $75 a month—twice as much as those international dummies charge for 100 Mbps AFTER the expense of putting in fiber. You tell me, what makes good business sense—$75 bucks a month for 5-10 Mbps or $40 a month for 100 Mbps? When it comes to profitability, we got it all over the aliens. AND WE CAN’T BE STOPPED. Trust me. It doesn’t get any better. Isn’t monopoly capitalism great?

I’ve heard people gripe ‘cause the U.S. is 17th in the world in broadband deployment—guys claim small high tech entrepreneurs can’t afford to come on-line and create new jobs. Oh, boo-hoo. Hey—our stockholders are happy. And we’re getting ready to merge with each other again. Just think, soon there’ll only be one U.S. telecom conglomerate—a true futuristic monolith with no competition! How 21st Century can you get? Will our stockholders be ecstatic or what?

You know, years ago, we had rural towns wanting to reduce cable rates—they actually waived franchise and access fees. The joke’s on them. We not only raised rates anyway, we kept all the fees, too—and they still can’t get high speed Internet. Ho-ho-ho—it’s Christmas every day with few access channels to show folks complaining.

Sooo, next step?—lose access. Now that’s smart business practice. Soon there’ll be no way for those access crazies to sing that old song: ‘Telecom Industry Gouges the Public.’ Let me get my violin.

Oh, and thanks, my press buddies, for carrying our water about this dynamite bill in the state legislature. As my teen would say—totally awesome. You’ve convinced my subscribers that it’s yet another tax—a double tax at that. Couldn’t have said it better myself. As we used to say in the eighties—cha-ching! I owe ya. Let’s do lunch—soon—on me—thumbs up.

Rita Stull, President, TeleDimensions, Inc.

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