PennPIRG: Reforming Media

by Caryn Hunt

According to its mission statement, “when corporate or government wrongdoing threatens our health and safety, or violates the fundamental principles of fairness and justice, PennPIRG stands up for Pennsylvanians”. I contacted Beth McConnell, Director of PennPIRG and the PennPIRG Education Fund via email to ask some questions concerning a bill being debated in the State Senate that would ease the way for Verizon to set up a video delivery service across the state in competition with Comcast, but without having to negotiate franchising rights with inidividual municipalities. Verizon hails it as the royal road to greater choice for the consumer, but network neutrality advocates say it is a new strategy by large media companies to bypass regulations that would ensure that the internet remain the open and free electronic marketplace we have all grown accustomed to.

Can you describe PennPIRG’s mission and involvement in media issues?
We conduct investigative research, publish reports and exposes, advocate new laws, and, when necessary, take corporate wrongdoers or unresponsive government to court. Our current priorities include: working to pass legislation that would ensure sufficient, reliable and adequate funding for public transportation; allow consumers to freeze access to their credit reports to block out potential identity thieves; requiring drug companies to disclose all of the results of their clinical studies so doctors and patients can make informed treatment decisions; and promoting media reform that protects consumers and the free exchange of ideas.

PennPIRG first became involved in media reform in 2003, when cable giant Comcast made a bid to purchase Disney. This potential merger would have created a massive media conglomerate that would have controlled too much of what the public hears, sees and reads in the media. Working in coalition with the state’s and nation’s leading public interest groups, we organized two days of citizen action around the Disney shareholder meeting in Philadelphia to show public opposition to the merger. Following that event, we joined The Philadelphia Grassroots Cable Coalition as a steering committee member. The Coalition has worked to hold Comcast accountable for it’s anti-consumer practices, and pushed the company to improve its practices. In 2003, we also helped generate hundreds of comments to the Federal Communications Commission (FCC) to show public opposition to media consolidation. Now, we’re continuing that work at the state and national level. At the state level, we’re working to stop Verizon from weakening protections for cable consumers. At the national level, we’re working to build support for Internet freedom legislation in Congress, and again helping hundreds of citizens comment to the FCC in opposition to more media consolidation.

Verizon believes the existing rules for local video franchises are unfair. What are the existing rules? And which rules do PA Senate bill 1247 (and it’s House counterpart) seek to change or revoke? Is this bill only about Verizon, or does it apply to any telephone company in the state?
Under federal law, a video service provider must give local governments the opportunity to negotiate a “franchise agreement” in exchange for being permitted to use public rights of way. This rule has long applied to Comcast and other cable companies, and now also applies to any Verizon is now doing. The franchise agreements are an important way for local government to ensure consumer protections and accountability from the service provider. While each agreement is different and tailored to the needs of the local community, most commonly these agreements include financial and technical support for public, educational and government (PEG) channels, permits before the company digs up city streets or sidewalks, franchise fees due to the city, and customer service standards. Importantly, most of these agreements also require the video service provider to make its services available to all consumers in a community over time, which prevents the company from cherry picking just the most lucrative neighborhoods, and leaving consumers in middle or low income areas without access to these vital communications networks. Senate Bill 1247 and House Bill 2880 as currently drafted would take away the rights of municipalities to negotiate these agreements, replacing it with one state-wide franchise agreement. This state agreement, as drafted in the current form, is incredibly weak. It includes no requirements that all consumers within a company’s service territory be served, virtually ensuring most consumers would never see any cable competition. It contains no customer service requirements, and would threaten PEG stations.

Any company that uses the public rights of way to offer video services would be affected by this legislation, but the bill is primarily to benefit telephone giant Verizon.

This is being framed as an incentive bill for the telephone companies to build out the infrastructure necessary to deliver broadband content. Supposedly passage of the bill would be good for consumers because it would increase competition for the delivery of video. Is that true?
This legislation as written would do nothing to speed up the delivery of broadband or video services to consumers. Verizon is deploying their fiber optic networks now, and has successfully negotiated franchise agreements with more than 80 municipalities in Pennsylvania to offer their video services. Other municipalities have all but begged Verizon to begin negotiations with them, but Verizon has been unable or unwilling to begin the negotiations. This is all before the company actually has a video service it can offer to consumers. This proves that the franchise negotiation process is not a barrier to competition. This legislation is an attempt by Verizon to avoid critical protections for cable consumers. State legislation to streamline the franchise negotiation process and strengthen consumer protections is possible, but Verizon is resisting such proposals.

These companies seem to convey the idea that building in network neutrality protections would hamper competitiveness, but it seems to me just the opposite is true. How are the national and state issues related? Are they part of the same initiative by the cable and telephone companies to influence public policy in these areas?
Big telecom and cable companies want to control too much of what we hear, see and read. That’s why they’re seeking federal legislation that would take away the rights of states and local governments to negotiate video franchise agreements, while at the same time seeking and winning legislation in states to take away the rights of local governments to protect consumers.

At the national level, leaders in Congress have attempted to get something back for consumers by attaching amendments that would prohibit telecom and cable companies from discriminating content on the Internet. Also known as “net neutrality” or “Internet freedom”, the legislation would stop companies like Comcast from blocking the web site of a competitive cable company on their networks; would stop Verizon from charging rival phone companies more in order for their web sites to work properly; and would prevent an Internet Service Provider from blacking out a web site of a political group it disagrees with. Internet freedom language is needed to ensure the Internet as we know it today continues, and does not become controlled by a few powerful gatekeepers. Inherently, a free and open Internet encourages competition and makes it possible for small, start-up companies to be economically viable. In testimony before the state House and Senate, PennPIRG urged the committees to also adopt Internet freedom language as part of any state cable legislation.

This may be a pointless question, but- as far as I can tell from my (limited) research, network neutrality laws and local authority to negotiate with service providers are what’s really, obviously, in the best interests of citizens. Why wouldn’t our elected officials come to the same conclusion? What argument is so compelling that it would trump the long-term benefits of preserving media diversity and the ability of local governments to have some kind of say in the network that will provide news and information to its citizens? I realize it means money to the companies, but how can politicians justify putting the brakes on the ability for all ideas to compete in an equally accessible marketplace?
It’s never pointless to question why policy makers would act to protect private interests at the public’s expense. Unfortunately, private companies like Verizon, Comcast and many others have entirely too much access and influence over elected officials. These companies also have tremendous resources to “gin-up” false citizen activism, as is evident by Verizon’s ad campaign urging its own customers to support legislation that isn’t in consumers’ best interests. Of course, we know that corporations contribute generously to campaign coffers for candidates from both sides of the aisle, buying additional access and influence. That said, a number of elected officials are standing up to these powerful interests to champion the public interest and fight for consumers. So it’s critical that the public communicate with their local, state and national representatives to make their voices heard. Pennsylvanians can visit www.pennpirg.org and click on “How You Can Help” to send messages to their elected officials on these and other issues. A page on the national media ownership issue and Internet neutrality is at www.pennpirg.org/mediaownership.

Haven’t taxpayers already subsidized both the cable and telephone industry in the past?
PennPIRG hasn’t done an analysis of public subsidies for cable and telphone companies. However, many of us may remember the generous public subsidies Comcast recently recieved from Governor Rendell to construct its new office tower in Philadelphia. And here’s an excerpt from a recent Washington Monthly article by Robert McChesney and John Podesta, “Verizon, for instance, didn’t complain last fall when Pennsylvania handed them subsidies for broadband development worth nearly 10 times what Wireless Philadelphia will cost. Neither did Comcast object when Philadelphia approved a $30 million grant to build a skyscraper that will house its headquarters.” (full text at www.washingtonmonthly.com/features/2006/0601.podesta.html)

The Philadelphia Inquirer published a letter to the editor on 9-16-06 signed by Mike McCurry and Christopher Wolf, co-chairs of Hands Off the Internet, that said that additional internet regulation is unnecessary since “American Web users already have significant protection against online discrimination. Well-established federal rules guarantee consumers’ right to access the legal content of their choice and specifically prohibit any broadband provider from interfering.” The letter alleged that Congressional involvement will cause “inevitable harm to consumers”, implying it will lead to higher prices, less choice and keep the industry from growing and adding jobs to the economy. Additionally, the letter stated that “suffocating regulations that curb job growth will only delay or halt the deployment of new networks in [historically underserved] areas.”  An op-ed printed in the Inquirer 9-27-06, by Scott Cleland of NetCompetition.org wrote that network neutrality would “take from consumers the wonderful diversity of competitive choice, customization and personalization they enjoy today, and replace it with one regulated ‘neutral’ choice for all”. Are any of these claims true?
A series of rulings at the FCC and Supreme Court decisions now allow companies to discriminate legal content on the Internet, such as blocking certain websites, causing some sites to load slower than others and charging web content providers more for their sites to work properly. This is unlike the Internet Americans have been used to, which has allowed the open and free exchange of ideas in a way corporately-owned media outlets rarely do. It’s allowed small companies like Google to turn into a massively successful enterprise, and has connected consumers to products from around the world. It’s hard to understand how limiting the flow of information on the Internet will cause harm to consumers, but easy to understand how it will allow big cable and telecom companies that control the gates to steer consumers to their products and services, and silence political speech.

For more information, PennPIRG has set up a page on its site devoted to the Pennsylvania video franchise issue. Write your elected officials and let them know that building consumer protections into video delivery laws is important to you.

2006-09-30 17:00:00

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