Tuesday, May 22, 2007

Justice In The Affairs Of Another

I have this nosey neighbor. She loves to make commentary on everything and everybody in the neighborhood. It’s kind of sad because if she really could see herself she wouldn’t be so quick to point out the flaws of others. I think she does it in order to deflect attention away from her shortcomings. Kind of like the U.S. Department of Justice.

In a letter sent to Wisconsin lawmakers (and lawmakers in other states considering state-wide video franchising) Assistant US Attorney General Thomas Barnett expressed the views of the Antitrust Division of the U.S. Department of Justice. According to Barnett, the Antitrust Division applauds the efforts of two Wisconsin lawmakers to ensure that the local franchising system “benefits consumers by allowing additional video-service providers to enter the market.” He said recent state-wide franchising efforts in other states have already yielded significant consumer benefits.

Oh really? And those benefits would be?

Barnett cites a survey conducted in 2006 by the American Consumer Institute, Does Cable Competition Really Work? A Survey of Cable TV Subscribers in Texas (2006). Link to it here at: http://theamericanconsumer.org/Consumers%20Saving%20from%20Competition.pdf

It’s a great little survey that American Consumer Institute uses over and over and over again in what they call “Consumer Grams.” Basically 1,077 Texans were surveyed with 883 identifying themselves as subscribing to pay TV or cable TV services. Of that 883, I couldn’t really figure out how many of those were satellite households because they didn’t break that down and the survey goes forward asking about the “cable company” as if all respondents were cable subscribers. But then later the report says “Satellite providers were clearly affected by competition, accounting for nearly 40% of the new competitor’s gain.” Yo! Hey! I thought removing those pesky “barriers to entry” set up so cruelly and unfairly by local government was supposed to break up the cable monopoly?

The Consumer Gram that cites this survey says that cable customers living in competitive markets reported saving (on average) $22.30 per month. However, the majority, 52% of those who switched, said their bill actually increased or stayed about the same. In other words, out of those who switched (191 households) almost 100 said the bill was the same or even went up! Was that from cable households or satellite households? I am confused.

The survey then claims that even if people don’t switch they enjoy lower prices just because there’s a competitor in the market. Well…not exactly.

502 people answered that they had not switched but they were aware there was a competitor in the market (again, satellite or cable?). Of those, a whopping 55 said they had benefited from lower cable prices as a result of the recent competition. However, a more significant 447 answered they had not benefited or were not sure if they had benefited. Of those 447, roughly 392 were absolutely, positively sure they had not benefited, they answered “No.”

Geesh, I guess had Barnett actually read the survey he might not have been so darn quick to cite it. Can you say “Egg on your face?”

There’s just so much more. Most of Barnett’s cites come from guys who work in think tanks with fists thrust deep into the pockets of the telecom industry. Stephen Pociask, who did the Texas survey, is in a wide web of all kinds of “institutes” including the Competitive Enterprise Institute which pretty much spends its time being the mouthpiece for industry (pick one). Pociask also is cited as the author of The Black Hole of Sacred Mountain, it’s a science fiction piece about black holes and sacred mountains, something Mr. Pociask proves himself to be quite an expert at.

The American Consumer Institute touted that Floridian consumers would save about $1.4 billion dollars per year in cable costs which is probably what lead the Governor to rubber stamp that bill. However, ACI says Texans would realize “millions” in savings. Sorry Texas. And, ACI says that if we could replicate the statewide bills across this country, we would see a savings of $23 billion per year. That’s basically taking the entire population of Florida, not cable households, and extrapolating it out across the entire population of the US. And I can’t figure out how they arrived at that $1.4 billion number in the first place. Only if I take an estimated number of cable households in Florida and multiply that by the $22 per month touted in savings from Pociask’s Texas survey and multiply that by 12 months do I come up with close to $1.4 billion dollars.

But remember, 78% of those in the Texas survey (who had not switched) said they had not seen their prices go down. And 52% of those who had switched said their bill increased or stayed the same. So the real number, even if we use Pociask’s $22 a month is more like $348 million. And you can cut that by half to two-thirds if you consider 52% who did switch saw the same bill or are paying even more.

Mr. Justice Department Barnett says other states have already yielded significant consumer benefits. Tell that to the people in North Carolina who passed statewide franchising well over a year ago and have yet to see one statewide franchise application. I am wrong on that, actually Time Warner, the incumbent applied for a statewide franchise but at&t (who pushed through the legislation) is woefully MIA. In that state consumers will greatly benefit from having to file complaints with the Attorney General’s Office, which by the way nobody consulted the Attorney General’s Office on whether they wanted or had the capacity to handle cable complaints.

I could go on and on, but then again I already have.

If I were a conspiracy theorist I would say that the U.S. Department of Justice has so much bad press these days they are using every effort they can to deflect, including sticking their big nose in the business of state legislatures. But I don’t need a conspiracy theory about that when there are real conspiracies staring us in the face. The conspiratorial behavior of the Assistant Attorney General Thomas O. Barnett and the lackies of Verizon and at&t, such as the American Consumer Institute.

Mr. Barnett should just come forward and plead guilty on this one, otherwise he faces a more embarrassing risk of having to plead he can’t read nor does he comprehend the English language. It’d be better for him to just admit bias or admit he’s looking for his next job after this administration.

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