SACRAMENTO, CA - Assembly Bill 2987 advances a statewide franchise that would allow telephone companies to compete with cable in movies, television and broadband. The prime mover of AB 2987 is Fabian Nunez, Speaker of the California Assembly, a liberal Los Angeles Democrat. Has the speaker acquired a new affection for choice and market competition, or is something else involved?

"I want customer choice, I want quality, and I want to lower the cost of the service,'' Nunez told reporters. But would AB 2987 provide choice, quality, and lower costs?

Texas provides an instructive example. As PRI's Sonia Arrison has noted, in the city of Keller, Charter Communications held the cable franchise and charged $68.99 a month for a television package alone. Last year Verizon introduced in Keller a service with 180 video and music channels for $43.95 a month or a 35-channel plan for only $12.95 a month. Verizon also offered fast, fiber-optic internet starting at $34.95.

Previously unchallenged Charter responded by dropping prices, offering a 240-channel package, plus internet service, for $50 a month. The speaker is surely right that similar competition in California would surely boost choice and lower prices. But are prices currently too high under California's franchise system?

"I have a simple rule of thumb for determining whether my cable TV service is overpriced," explains Michael Hiltzik, business writer for the Los Angeles Times. "Is it a monopoly? Then it's overpriced. And let's face it: Virtually every cable TV operation in the country is a monopoly."

California's cable industry argues that allowing Verizon, AT&T and others to compete will hurt low-income communities. Phone companies, cable spokesmen charge, will neglect those and cater to the affluent.

Local governments, who negotiate franchises with cable companies, are generally against allowing telephone companies to offer video and broadband. PRI's Sonia Arrison shows how cities have used the franchise system to extract goodies from cable companies. Sacramento required a cable service provider to plant 20,000 trees. San Francisco required a franchise grantee to provide every cable subscriber with four coupons for free Pay-Per-View, purchase a mobile video production van for municipal use, and wire more than 160 public buildings with free cable.

On the other side, the California Chamber of Commerce backs AB 2987 as beneficial to consumers and the state economy. Also on board are the Communication Workers of America (CWA). Indeed, on April 6, when Assembly Speaker Nunez unveiled his bill at the capitol, Nancy Biagini of the CWA was standing behind him. This raises another issue.

Cable companies, which represent the status quo, are largely non-union. On the other hand, the telecom outfits seeking entry to the market are highly unionized. Is AB 2987 just another form of union advocacy or a nod toward the efficiency of the market? A simple test could settle the matter.

If it is good for consumers to enjoy choice in television, it follows that choice is also good in a more important area: education. Like the current cable franchise set-up, California's school system is an expensive, inefficient monopoly, the educational equivalent of one-channel television. But unlike the cable stand-off, the public-employee unions like it that way. They remain staunch supporters of the status quo, foes of choice, and promoters of increased spending, regardless of results.

Speaker Nunez is right that we need more choice, quality and lower prices in television service. If he follows that logic, he would push to empower California's parents and students by giving them choice in education. That, of course, would require defiance of public employee unions.

Few in Sacramento are up to the task.

K. Lloyd Billingsley is Editorial Director at the Pacific Research Institute. He can be reached via email at
klbillingsley@pacificresearch.org.