Why the Congressional Hearing on PEG Matters by Michael Eisenmenger Posted on January 29, 2008 - 11:14am. Today's Commerce Telecommunications SubCommittee Hearing, "Public, Educational, and Governmental (PEG) services in the Digital TV Age", was called by Rep. John Dingell (MI) in response to Comcast's actions in Michigan. Comcast had unilaterally announced that PEG channels in many municipalities would be bumped from analog cable carriage to obscure digital channels in the 900 range. The move would mean that 'basic' cable subscribers would no longer have access to the local PEG channels, in fact they would need to subscribe to more a expensive digital cable service tier and pay for an additional charge for a digital cable set-top box. There's much more involved than simply channel slamming of course, but first a little history. It was just two years ago that this very same Congressional Subcommittee laid the tracks for the current the State Cable Franchise train wreck. At that time the Republican Party was in the majority and Chairman Rep. Joe Barton of the AT&T state of Texas introduced legislation that later began known as the COPE ACT. This was actually a bi-partisan Bill, Rep. Bobby Rush of Illinois co-sponsored the bill after AT&T threw a million dollars to his personal foundation (headed by his son). But the telco money flowed liberally in all directions, and the well greased bill passed through committee and slipped through the House as well. It wasn't until COPE hit the Senate where Senator Stevens got tangled up in tube talk and net neutrality that the federal franchise train derailed for good. COPE failed, but a legislative template had been put in place, after all the bill was largely written by telephone company interests and they weren't about to give in. Having failed at the Federal level, the telcos quickly shifted gears aiming their lobby dollars at State Houses around the country. Only 18 months later, a total of 19 State Cable Franchise Bills have been passed (with more in play). Not all are alike, but many simply contain the boilerplate legislative language that AT&T and Verizon previously fashioned for the COPE Act. And that leads to Michigan and the need for Congress to revisit what they helped launch in the first place. The "uniform video services local franchise act" passed in Michigan in Dec 2007 and quickly went into effect Jan 1st 2007. A new study by Howard and Howard Attorneys revealed that "anticipated benefits of the new law haven't yet materialized" and it rated cable competition, prices and service as 'very poor'. While AT&T has been slow to 'build-out' new services under the state franchise, the cable companies, in particular Comcast, have been quick to take advantage of the relaxed regulation. This pattern has been repeated around the country as the cable and telephone companies reposition for duopoly control, at the expense of local municipalities and in particular PEG channels and services. The Alliance for Community Media has documented the impact in detail. For a chart of this go to Michigan? Michigan isn't the first to encounter PEG "channel slamming", but perhaps the most widely affected. Comcast's plan to move PEG channels to digital would affect about 40% of its 1.3 million Michigan customers. While Comcast pitched the channel move as technical upgrade, this quote from a cable rep. sums up the business logic: "Analog channels consume capacity where I can put eight [digital] channels in the same place," Michael DiMaria, Cox Communications (from KOLD News ) Comcast is able to do this partly because of AT&T's influence on the state video cable franchise bill language. As an IPTV provider, all of AT&T's network is digital, as such they eliminated requirements for 'analog' cable TV channels since their U-Verse system is unable to deliver such signals. As cable companies apply for and receive new terms under state cable franchising, they quickly try to free up bandwidth for more digital channels by moving PEG channels from analog carriage. Comcast was merely speculating in bandwidth real estate, evicting the PEG channels and relocating them to Siberia - and they got caught. But here's another underlying issue that might not come up at today's hearing.

The original intention of keeping PEG channels on analog carriage was to make them as accessible as possible to members of the communities they serve. As unregulated cable pricing escalated with many different tiers of services, "Basic Cable" service remained the only tier of service with some local regulatory oversight of pricing. The logic of "Basic Cable" was to make cable affordable to seniors and low-income residents who needed it due to broadcast reception issues but would also benefit from local PEG channels and services. This last vestige of cable pricing regulation is now under threat since the FCC can, and does, lift local oversight when it determines real "competition" exists in a service area. As a result, "basic cable" prices will skyrocket as AT&T and the other telcos roll-out services (competition=higher prices). Of course, 'basic cable' prices are a well kept secret. Few cable companies advertise this tier of service, in fact many make it difficult to even get information about the service. We checked the Comcast web site and entered a Dearborn Michigan address and zip code to search for "Basic Cable" service (we used the address for Comcast's Dearborn MI office). The results returned only two introductory tiers available for purchase on the web site: Digital Starter - $24.99 and Standard Cable - $49.49 (analog). Looking further we discovered a channel guide for "limited basic" (analog PEG and broadcast channels - the one price regulated with local oversight), but nowhere on the web site could we locate pricing or a means of ordering the service. It took an online chat with Comcast service reps to get the information (they were helpful). It turns out that "limited basic" is available for the Dearborn area at $11.99 a month, more than 50% less expensive than the digital starter service and 25% of the "standard cable" analog service. And since "limited basic" is analog, a $4.20 per month charge for a digital set-top box is also unnecessary. Eventually, all cable TV services will be digital. The FCC mandate for this is three years after the DTV Broadcast Transition (Feb 2012 pending prior review). Cable companies wishing to transition out of analog carriage before this date can do so - if they provide subscribers with set-top boxes and continue to provide carriage of local channels.

In the case of Comcast in Michigan, they weren't eliminating analog carriage entirely, merely repositioning some analog channels to capture more digital bandwidth. What Next? The Jan. 29th Congressional Hearing is long overdue, Hopefully what comes from it will be increased Federal scrutiny over the state cable franchising process and subsequent impact. Eventually there may need to be Federal legislation to reverse the more glaring shortcomings of these state cable franchises. The hearing today includes a Comcast executive vice president David Cohen and Gail Torreano, president of AT&T Michigan. David Cohen, has already issued a preemptive apology, but we prefer actions to words and Comcast has much to fix in Michigan and around the country. Also speaking will be John O'Reilly, mayor of Dearborn, and Annie Folger, executive director of Midpeninsula Community Media Center, Palo Alto, Calif. This is probably the fairest hearing we've seen for cable and telecom issues and Rep Dingell is to be commended. In the past under Rep Barton's leadership, there were always 'telco astroturf' groups participating as 'public interest' organizations.