Cable Competition Bill Still Needs Some Work

CourierPostOnline — Thursday, July 27, 2006

While flawed, a bill to increase competition in the cable television market could help New Jersey consumers.

The cable competition bill the Legislature recently sent to Gov. Jon Corzine deserves his support, but not before it's altered.

Corzine should use his conditional veto power to ax the tax increase built into the bill. He also should send the bill back to the Legislature with additional instructions to prevent the bill's biggest immediate benefactor, Verizon, from not offering service to some communities.

Without these changes, some South Jerseyans could end up paying more for cable service — whether they purchase service from the current monopoly, Comcast, Verizon or some newcomer. Yet, there is no guarantee that customers will enjoy lower prices that could come from competition.

The bill approved by the Legislature would let cable providers sell cable service directly to customers. The companies would no longer need to make local franchise deals town by town.

This would make it easier for cable companies to enter New Jersey communities now served by just one cable provider. That would be a welcome change.

New Jerseyans shouldn't have only one company from which to purchase cable television. That's a monopoly, and it's what most South Jerseyans face in the cable market. It's no wonder, then, that many South Jersey residents pay more than $50 a month just for basic cable.

But the spendthrifts in the Legislature apparently think competition will lower bills so much that customers will have extra money on hand. They think that money should go into the pockets of local governments in the form of higher taxes — cable taxes would double from 2 percent to 4 percent.

But aren't New Jerseyans paying enough with the recent hike in the sales tax?

Corzine should ax this increased fee from the legislation.

State lawmakers are making the same false assumption made by congressional lawmakers in 1996 when they deregulated telecommunications nationwide. As part of that, Congress lifted control over cable rates because it expected competition to keep customer costs reasonable. That competition has been slow in coming. Meanwhile, big cable companies, such as Comcast, dominate the landscape.

More than 90 percent of U.S. households have only one cable company available to them. This lack of competition has resulted in cable service jumping by more than 40 percent since 1996.

As written, the legislation doesn't guarantee competition will materialize. Cable companies will be allowed to serve some communities, but not others. With the tax burden as high as it is in New Jersey, residents who benefit from cable competiton should be able to keep money from lowered cable rates in their pockets. The cable tax rate shouldn't be increased with more competiton. And Corzine should insist that competition extend to every New Jersey community.

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