Law might lower cable costs

By JAMES D. McWILLIAMS

jmcwilliams@thestate.com

More competition in video services could benefit consumers

A new state law should make it easier for phone companies to offer cable-TV service in South Carolina — and easier for both cable and phone companies to expand video service into new neighborhoods.

That means consumers could pay lower prices within a few years.

But the law also lets businesses vary their video-technology offerings by income levels for an area. Low-income households could miss out on the law’s benefits as a result, critics said.

Gov. Mark Sanford signed the law this week. It gives the secretary of state’s office oversight of a shortened process of granting cable franchises. Previously, individual cities and counties granted franchises in an often lengthy process.

Certain aspects will not change, however:

• Local governments still will have a say in approvals.

• Cable companies still will pay those local governments franchise fees comparable to past rates, and capped at 5 percent.

• Franchises still will be granted for specific, local areas, rather than for the whole state at once.

The law “won’t have much impact on local governments,” said Howard Duvall, executive director of the Municipal Association of South Carolina.

Hank Fisher, BellSouth’s executive director for South Carolina, said the new law will create more competition in the cable industry, which should force cable companies to cut prices.

After Texas passed a law similar to South Carolina’s, the cable system in one Texas town dropped its prices significantly, Fisher said.

“I can’t say what our prices will be, but they will be very competitive, and we will be in this business to win,” Fisher said.

Phone companies pushed for the new law, and cable companies and municipalities fought for changes in it, according to those parties.

A cautious Time Warner Cable spokesman Bud Tibshrany said competition could lower prices.

Tibshrany focused more on how the new law will save money for cable companies by consolidating cable oversight in one state office. Numerous factors could affect whether those savings will be passed on to consumers, he said.

“The new law will expedite the franchising process, which will save a considerable amount of time and money,” Tibshrany said. “In no way can I say it’s going to affect customer rates.”

BellSouth plans to offer video service through a technology called “Internet Protocol TV.”

The high-speed phone service necessary for the technology should be available to 80 percent of BellSouth customers within four years, Fisher said. Some customers could get the technology sooner.

MORE CHANGES

Other provisions in the new law drew criticism from Duvall and others:

• Unresolved complaints from cable customers now must go through the state Department of Consumer Affairs, which Duvall said has little authority to fix problems.

Consumer Affairs lawyer Danny Collins said his agency can only mediate complaints.

“If we can’t solve problems through mediation,” he said, “there is nothing we can do to enforce” a solution.

• Provisions of the new law could make it easy for video businesses to discriminate against rural and low-income areas.

“It’s not good public policy,” Duvall said.

The new law says no cable provider can “deny” service to any group because of the income level of its neighborhood, but the law lets cable providers offer different “content, service and functionality” based on areas’ income levels.

Interpretations of that vary.

Nancy Horne, president of the S.C. Cable Television Association, said the language means new video companies can offer certain technology only in wealthy, gated communities.

“We don’t think it’s good for South Carolina for some areas to have less competition than others, and we are concerned that that’s what’s going to happen,” Horne said. “I’m not sure the (law) goes far enough to make sure the entire state sees the benefits.”

Rep. Bill Sandifer, R-Oconee, a lead sponsor of the legislation, said his interpretation is that companies can offer different video technology in different regions of the state, but they must offer the same technology to all customers in the same city.

BellSouth’s Fisher said the law means companies can use cheaper technology to serve customer areas that are difficult to reach otherwise. For instance, a company could use satellite dishes to reach rural areas, but could use copper wires or fiber-optic lines elsewhere.

The quality of video transmissions varies with different technology, Fisher said, “but with competition, all quality improves.”

Reach McWilliams at (803) 771-8308.