|America's independent, non-partisan advocate for overburdened taxpayers.||Home | Donate | RSS | Log in|
Coalition Tells Congress: Help Consumers, Hasten Video Competition
March 15, 2006
Dear Member of Congress:
We, the undersigned organizations, are longtime advocates of free market competition as the best mechanism for providing higher economic growth and greater prosperity for all citizens. Competition delivers lower prices and better service. Accordingly, we have all consistently and continually urged Congress to remove barriers to freer markets.
We write today to reiterate our support for increased competition in the area of telecommunications and to highlight recent events that provide evidence of the virtues of competition.
The good news is that competition has advanced across almost all fronts of the telecommunications marketplace in recent years. The bad news is that in the delivery of video services – what most people simply call cable TV service – there is still a virtual monopoly with consumers remaining largely at the mercy of cable TV companies.
The recent experience of Keller, Texas is instructive of the benefits of competition in telecommunications. Last fall, the residents of Keller got the opportunity of having added choice in delivery of video services. Verizon was allowed to introduce its FiOS service, which offers high speed Internet service and video services. This FiOS service represented direct competition to the local cable company. After a long history of continually raising rates, the cable company serving Keller actually reduced its rates subsequent to the introduction of competition.
The lesson is simple: consumers win when and where competition exists. With competition, video service prices come down as local cable companies are finally forced to compete for customers.
The biggest single barrier to effective competition in video services today is the existing requirement in most states that new companies wishing to offer those services must first get permission to do business – a "franchise" in industry parlance – to offer service. This antiquated regulatory model does nothing to protect consumers, but it does a great deal to protect the incumbent cable TV companies. It is no secret that the local cable companies are the leading advocates for requiring potential competitors to navigate this regulatory morass city-by-city before being allowed to serve consumers.
Fortunately, we have seen signs in Congress of growing support for reform, highlighted most recently by the bipartisan set of principles set forth by Senators Smith, DeMint, Ensign, Kerry, McCain and Rockefeller. These principles in favor of facilitating competition are clearly the right approach, and we are encouraged that a bipartisan group of Senators has coalesced behind them.
As you continue your deliberations, we urge you to keep the best interests of consumers foremost in mind. We believe that policymakers in Washington and in our state capitals must work to end barriers to greater competition such as convoluted franchising requirements. Removing barriers like these will mean more choices and lower costs for American consumers.