Naked City

When Gov. Rick Perry added telecommunications deregulation to the call in the Legislature's special session, few could have been surprised. Dereg was slated as one of the regular session's major undertakings, yet like property tax legislation, negotiations petered out by the session's end and may have died again this week. Unfortunately, almost just as unsurprising is the fact that the new telecommunications deregulation bill is also like property tax legislation, which sidesteps taxes on major Republican donors, leaving communities to fend for themselves, in that it's a boon to Texas mega-employers (and GOP contributors) SBC and Verizon.

Although Republican Troy Fraser's Senate Bill 21 deals with exciting new developments like broadband over power lines and streaming Internet television, the legislation plays favorites with phone giants by letting them circumvent regulations placed upon cable companies in rolling out television services. What's even more incredible is that SB 21, which passed out of the Senate July 13, two days after it was added to the call, and made it out of the House July 17, might not even end up applying to the phone giants. The question of whether Internet television should be governed by cable rules is currently before the deregulation-happy Federal Communications Commission. According to Rondella Hawkins of the city's Department of Telecommunications and Regulatory Affairs, SBC and Verizon are participating in "insincere negotiations" by supporting state legislation that eases their rollout against cable, while lobbying federally to ensure even those laws don't apply. "SBC and Verizon are lobbying the state at the same time they're lobbying the federal level," Hawkins said.

Cable providers currently need approval from each municipality in which they operate. SB 21 would create one statewide franchise system for SBC and Verizon to go through, which, depending on the FCC's decision, might not even be necessary. "It is not productive when the two major telecom companies pressing for this legislation readily admit that they hope none of the provisions of this bill ultimately apply to them," reads a letter to Sen. Fraser from the mayors of six major Texas cities, Austin's Will Wynn included. While not addressed in the mayor's letter, the loss in local revenue SB 21 creates is particularly sticky for cities. The switch from municipality franchising to a "state-issued franchise to provide cable or video services" cuts local governments' funds. Hawkins said SB 21 is better than the legislation that was proposed during regular session. Unlike the immediate switchover the original bill called for, Texas cities collect 5% gross revenue franchise fees from the state and existing franchise companies are allowed to run their course under SB 21.

The bill also allows for an override of federal anti-discrimination laws by allowing providers to pick and choose areas of the city in which to offer their services. The mayor's letter notes an insulting provision allowing for the rollout of high-speed services in higher income areas, as long as low-speed services are offered in low-income areas. On phone service, SB 21 allows for increases in additional services like call waiting and caller ID in large markets, as well as in smaller markets where there is demonstrated competition.