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Cable ‘Overbuild’ Puts Choice in Hands of Consumers

City Councilman Alex Padilla, who represents District 7, chairs the Information Technology and General Services Committee

Say you’ve been unhappy with service at your bank: The lines are too long, the fees are too high and the services just aren’t right for you. In today’s competitive marketplace, you have the freedom to take your money to another bank that better suits your needs.

As a consumer, you also have a choice of telephone long-distance carriers and Internet service providers.

Sounds good, but what if you could also choose your cable television service provider? Consumers throughout Los Angeles have some choice of cable offerings now. New services such as cable telephony, high-speed Internet access and digital cable television are being promoted through mailings, bill inserts and TV ads.

To give consumers incentives to try out these new services, installation and setup fee waivers, along with reduced monthly rates, are as commonplace as Monday night pro wrestling matches on cable television. The cable companies’ investments in these new technologies--besides improving their balance sheets--provide the public with an opportunity to discover new products and digital services.

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But one question remains: Are these new services living up to the promises made by the cable companies? Just last year Time Warner Cable arbitrarily removed its feed of ABC’s network broadcast due to a business dispute with ABC’s parent company, Walt Disney Co. Although business disagreements are commonplace in today’s competitive media environment, it was unfortunate that this corporate boardroom spat spilled over into the homes of viewers, including thousands of San Fernando Valley residents, leaving them in the dark, at least when it came to seeing “Who Wants to Be a Millionaire?”

And just recently, AT&T; Broadband announced an average cable TV rate hike of 4.8%. Consumers have a limited choice when faced with an unfriendly cable service provider: to switch to satellite television service. During the service blackout on Time Warner, ABC and DirectTV gave away free set-top units knowing that they could provide the television service that Time Warner was unwilling to make available.

But what if there had been yet another cable company, across the street or just a phone call away, that you could have turned to? That day may soon be coming.

New technology companies such as RCN and Western Integrated Networks are negotiating with Los Angeles to provide cable service in designated areas, including parts of the Valley. This concept--known in the industry as overbuild--allows more than one cable company to provide service in a specific geographical area, with each company having its own proprietary cable lines. With overbuild, cable companies compete for subscribers in the same neighborhoods, as opposed to the configuration today, where consumers merely have the choice of one and only one cable company.

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When cable companies compete, the consumer ultimately stands to benefit. In Somerville, Mass., a cable overbuilder entered the marketplace, and basic cable rates decreased. Somerville’s cable companies also reduced rates for premium channels, such as HBO and Cinemax. And subscribers were given the flexibility of purchasing premium services without having to subscribe to standard cable service.

If overbuilders were authorized to begin construction of their networks in Los Angeles, cable subscribers should have new and improved services at a lower cost. Cable overbuilders would be held to the same customer service standards as cable companies are today: Repairs would have to be made in a timely fashion, basic rates could not be raised without city authorization and technological “redlining,” where one technology is offered in one neighborhood but not in others, would be prohibited. Moreover, these cable companies could partner with the city in establishing neighborhood technology centers where both adults and children would have access to computers and the Internet.

We are living in exciting times, and the introduction of new technologies and services has the potential to transform our lives for the better. But only with consumer protections and reasonable market-based price competition will everyone be able to enjoy the ride on the information superhighway.


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