Media Alliance

Competition or Redlining?

Phone Companies' Redlining Not Good for Digital Divide

Fort Wayne Journal Gazette
By James Bertram, Mayor of Lockhart, Texas

First-of-its-kind video franchise legislation written on behalf of the big phone companies made dubious history when the Texas legislature enacted it this year. But before Congress, Indiana and other states consider mimicking this legislation, they should look under the hood. For if they do, they will realize that what was sold as a plan for competition is really just a road map for the Bells to systematically redline minority and low-income communities by bypassing them in the deployment of their high-speed fiber networks.

Last year, the largest phone companies announced their plans to build fiber optic networks that will deliver voice, high-speed Internet and, importantly, TV services (using a technology called IPTV). One company’s plan was particularly brazen, targeting only 5?percent of residential consumers that it considers “low value” while deploying high-speed facilities to 90?percent of “high value” neighborhoods and to 70?percent of “medium-value” neighborhoods.

By its own terms, “low value” customers are the 18?million consumers within the company’s service areas who can’t afford $110 to $200 per month or more on telecommunications services. Since many low-income and minority households do not have the luxury of spending upwards of $200 a month on telecom services, these companies have all but declared open season on the “digital divide.”

The problem for the big phone companies is that for almost as long as the Supreme Court has outlawed separate but equal schools, local governments have required cable television operators, through what are known as franchise agreements, to offer television service to all households in their jurisdictions. Congress added to this requirement in the Cable Act of 1984, prohibiting discrimination against television consumers based on income. Congress could not have been any clearer, stating that “cable systems will not be permitted to ‘redline.’?”

To get around the law in my home state of Texas, the big phone companies drafted legislation that would make Jim Crow proud, freeing them of their obligation to enter into local franchise agreements, while at the same time allowing them to cherry-pick which neighborhoods – even streets – they will serve. And in an all too familiar tactic, they hired a legion of lawyers and lobbyists to walk the back halls of our state capitol to make the legislation come to pass.

And while legislators in Indiana and Washington, D.C., are likely to come under similar pressure, they should know that not only is redlining against the law, it also makes for bad public policy. First, allowing the big phone companies to cherry-pick will cause everyone’s prices to rise. These companies’ video service to the rich will no doubt be expensive, and the cost of local cable services will no longer be spread out among lucrative and non-lucrative customers, increasing monthly bills.

Most importantly, if we adopt the practice of segregating advanced voice, Internet and IPTV services only to communities of privilege, the digital divide will explode into a digital abyss. As residents in low-income and minority neighborhoods find themselves steadily priced out of the market, the valuable resources found on television and the Internet will vanish, leaving them with fewer opportunities than they have today. Meanwhile, the affluent neighborhoods grow even more so, gaining access to untold new technological tools.

And there’s no good reason to let the big phone companies get away with it. By law, these companies can receive a franchise even when a city has already reached a franchise agreement with the local cable operator. In fact, cities in Indiana have granted franchises to more than one company.

We should be skeptical of the phone giants’ claims that they need legislative relief in order to build out their network; we’ve been down that road before. They have repeatedly told Congress and the FCC that they will go into underserved areas only to say it’s not enough after receiving the deregulation they sought.

And it was only a decade ago when a phone company executive told elected officials in my state that removing limitations on the company’s profits would bring advanced telecom services to “our schools, hospitals and criminal justice organizations.” Yet, despite the profit caps being removed, the network was never built, sending more hard-earned tax dollars into the phone company’s pockets in exchange for nothing.

The big phone companies’ attempt to balkanize their rollout of high-speed facilities, and to systematically exclude low-income and minority communities, runs contrary to federal law, local franchise agreements and sound public policy. For decades, the Supreme Court has recognized that “separate is inherently unequal.” By pushing a policy that will deepen an already cavernous digital divide, the big phone companies seem bent on keeping us separate – and therefore unequal – a bit longer.

James Bertram is the mayor of Lockhart, Texas. He wrote this for general use by newspapers.

Posted by jeff at February 24, 2006 09:29 AM | TrackBack