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Cooper urges more protection for consumers on cable TV proposal

Release date: 6/20/2006

Attorney General concerned that bill could cut service, raise rates for some consumers

 

RALEIGH: A bill that would change the way cable companies are regulated needs better protections for consumers, Attorney General Roy Cooper told legislators Tuesday. Cooper wrote to legislators to express his concerns about Senate Bill 1559 and House Bill 2047.

“Although the intent of increased competition is good, I believe this legislation needs better protection for consumers,” Cooper wrote.

The bill would change North Carolina’s practice of local franchises for cable TV and instead require a statewide franchise if a competitor such as a phone company chooses to offer television service in the same area.

Cooper is concerned that under the proposed law television service providers might offer service to high density areas, which are cheaper to serve, while ignoring rural or low income areas. Consumers in areas with less competition could wind up paying more for services as television providers seek to make up for the costs of competing in urban markets.

“This is a new idea that has been tried only a short time in a few communities in a small number of states, so we have no real track record on how it will work,” Cooper said in the letter. “I’m concerned that we are rushing into this without making sure we aren’t leaving consumers behind.”

The proposal would also change the way that consumers get help in the event of a problem with their service. Now consumers with complaints about their cable service contact their local government. The proposed legislation shifts this responsibility to the Attorney General’s office without providing any funds for staff to handle the 50,000 or more complaints expected per year.

“We can all benefit from additional choices in the marketplace, but only if the choices come with protections that treat consumers fairly,” Cooper wrote.

[Note: the text of the letter follows.]

 

June 20, 2006

 

The Hon. Dan Clodfelter The Hon. William Wainwright The Hon. Daniel McComas The Hon. Becky Carney North Carolina General Assembly Raleigh, N. C. 27602

 

Dear Members:

 

I am writing to express my concern regarding Senate Bill 1559 and House Bill 2047 which would deregulate cable television service. Although the intent of increased competition is good, I believe this legislation needs better protection for consumers.

This is a new idea that has been tried only a short time in a few communities in a small number of states, so we have no real track record on how it will work. A few years ago, there was a great push to rush us into deregulation of electricity and we were smart to wait and see how it panned out in other states because the results weren’t good.

Although I know there are differences between electricity and cable, I’m concerned that we are rushing into this without making sure we aren’t leaving consumers behind.

North Carolina consumers deserve the same level of protection they are getting under the current system. Now consumers with complaints about their cable service contact the local government that has the television franchise. Franchise fees provide funding to the local government to pay for helping consumers. The proposed legislation shifts this responsibility to the Attorney General’s office without the funds for staff to handle the complaints.

Looking at the current experience of some local governments, there is a potential for 50,000 statewide complaints a year. Now we handle approximately 75,000 important consumer complaints annually helping them get refunds and solve their problems. This legislation alone could increase complaints we receive by twothirds.

In addition, the proposal allows providers to offer service to high density areas, which are cheaper to serve, and ignore rural or low income areas. There’s also the potential for cost shifting as competition heats up in high density urban areas. Some consumers could be stuck with higher prices.

I appreciate the intent of the legislation. We can all benefit from additional choices in the marketplace, but only if the choices come with protections that treat consumers fairly. I hope you will step back and address these concerns.

 

With kind regards, I am Very truly yours,

Roy Cooper

RAC/sm

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