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Indiana’s TV Law Lauded

2/29/2008 7:00 PM Eastern

Ball State University researchers said Indiana’s 2006 telecommunications-reform bill has advanced the deployment of video and broadband services in the state, a finding disputed by incumbent cable operators.

The 106-page report from the university’s Digital Policy Institute concludes that HEA 1279 was good for the state and goes on to detail the expansion of digital-subscriber line, high-speed data lines and video service deployed since the bill was signed.

But Tim Oakes, executive director of the Indiana Cable Telecommunications Association, notes that the deployments referred to in the report were announced by providers such as AT&T and Verizon Communications before the bill was passed.

“To say the bill caused [these investments] is flat-out wrong,” he said, adding, “DPI is Latin for AT&T.” The telecommunications giant provides funding to the Ball State institute.

“We are not a front for AT&T,” counted Barry Umansky, senior research fellow for the institute. The institute receives money from a variety of sources, he said.

“We don’t make up the facts … we documented our sources in the report,” Umansky said. Criticism is coming from people who were “opponents of the bill from the get-go,” he said. One critic, Comcast, applied for state franchising and is benefiting from the bill, he noted.

The report says:

  • DSL is available in 102 more communities since the passage of the bill.

  • 1.5 million high-speed lines were in place by the end of 2006, a 72% increase over 2005.

  • Telecommunications companies invested $516 million in 18 months in the state.

The report notes AT&T’s U-verse multichannel-video service is now available “in parts” of Anderson, Bloomington, Indianapolis, Kokomo and Muncie. Verizon’s FiOS TV services have launched in Fort Wayne, New Haven and Hunterstown.

Rate reduction is often a key argument for introducing cable competition. The report’s summary cites the belief, based on Federal Communications Commission and U.S. General Accounting Office data, that prices can drop 15% to 20% in places where wireline cable competitors are introduced. The summary states that in one case, cable bills reportedly dropped from $90.60 to $65.65. The body of the report attributes those figures to “testimonials by Comcast customers when U-verse enters the market.” But the main report also says that “rising prices continue to be a problem for all consumers.”

Incumbent cable operators respond to competition when “measurable market penetration” occurs, according to the report. That hasn’t happened yet, it states.

Reports compiled by local officials in other states where franchising has been assigned to the state government — including Texas, Michigan and North Carolina — have concluded that state franchising has not prompted published cable rates to decrease.

Special rates, offered as retention lures, may offer short-term benefits, they have noted, but over the long term, rates continue to be increased by all providers.

September