Out of Control Policy Blog

Blanco blocks cable competition and (surprise!) Cox raises rates

The ink was barely dry on Gov. Kathleen Blanco's veto of statewide video franchise reform when Cox Communications announced rate increases in Baton Rouge and Lafayette. The veto will slow BellSouth deployment of competitive cable TV services in Louisiana. In her veto, Blanco said she was more concerned with safeguarding the revenue flow local municipalities receive from the existing franchise fees. In other words, the demands of the tax man trump the documented consumer benefits of cable competition, at least in Louisiana.

Cox said that prices for its expanded-basic cable TV will increase by $3.34 to $46.99 for its Baton Rouge. In Lafayette, rates for expand-basic will increase $5.94. The rate hikes take effect Aug. 15.

While Cox will lower rates on its low-end basic cable tier, it removed popular channels such as The Weather Channel and ESPN, which will take over Monday Night Football broadcasts this year, from the basic line-up. Customers wanting either will have to upgrade to the more expensive expanded basic tier.

In addition, Cox will raise prices $2 across the board for its high-speed Internet service. A spokeswoman attributed the increases to increased fuel costs and recovery from Hurricane Katrina.

Tellingly, Cox is not increasing rates on its Internet-based telephone service, the one area where it competes head-to-head with BellSouth. Fortunately for Cox, apparently high fuel costs and Katrina clean-up had absolutely no impact on these operations.

The franchise reform bill would have allowed BellSouth faster entry into Louisiana cable markets. Blanco's veto turned back legislation that passed both houses of the Louisiana legislature by a nearly 3-to-1 and bucking a growing national trend in support of franchise rules that spark cable competition.

Louisiana's example now stands in stark contrast to states like Texas, where franchise reform was followed by competition and lower cable rates.

So, one more time...Franchise reform means competition. Competition means lower rates and faster deployment of innovative technology, such as fiber to the home and Internet Protocol TV. Consumers win. Regulated monopolies and deliberate obstacles to market entry mean rate increases and delayed investment. Consumers lose.


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