published Thursday, February 28th, 2013

EPB's handout: Bo Watson's bill harms consumers, kills competition

Should area customers of Comcast and other cable and telecommunications providers be forced, by state law, to pay higher rates for cable, telephone and Internet service to subsidize EPB's struggling fiber business? Of course not.

But that's exactly what will happen if an ill-conceived bill proposed by state Sen. Bo Watson, R-Hixson, passes through the Tennessee legislature.

Throughout the nation, cable, telephone and Internet providers pay a fee every year to electric providers to rent a portion of electric poles to run the lines necessary to provide their services to homes and businesses. That fee is supposed to be used by electric companies to help install and maintain poles.

Watson's legislation would allow Tennessee's electric cooperatives and government-owned utilities to charge an exorbitant amount for cable and telecommunications companies to use electric companies' utility poles.

Nationally, this "pole attachment fee," as it is known in the industry, averages just over $7 per pole, per year. In Tennessee, however, the average fee charged by electric companies is currently more than $17 annually for each pole -- well more than the amount necessary to cover the cable and telecom companies' portion of the installation and maintenance costs.

If Watson's bill passes, that already hefty $17 average charge will skyrocket to $33 per pole, per year -- making Tennessee's pole attachment fees more than twice as high as any other state in the nation, according to the Federal Communications Commission.

Chattanooga's electric company, EPB, has become a leader in this wacky effort.

EPB's government-owned, taxpayer-funded venture into the fiber businesses has been a disaster. Despite forcing taxpayers and electric customers to spend more than half a billion dollars building the infrastructure to provide cable, telephone and Internet servic, EPB's fiber service is only profitable if you massage the numbers and squint just right.

As a result, EPB needs two things: more money and more customers. If state Sen. Watson's bill passes, EPB would get both.

First, the bill would force Comcast and other area cable and telecom companies to pay millions of dollars more in pole attachment fees that would ultimately subsidize EPB's fiber efforts.

Second, if Watson's dreadful piece of legislation passes, Comcast and EPB's other competitors in the cable and telecom arena would have to raise their rates to cover the outrageous expense of the pole attachment fee hikes. That would drive customers away from the private cable, phone and Internet companies and to EPB.

It's easy to understand why EPB wants to bully cable, telephone and Internet companies who actually succeed in business without handouts from taxpayers and electric customers. The proposed bill would force EPB's competitors to hand over millions of dollars and, ultimately, thousands of customers to EPB.

What is confusing is why Watson wants to help EPB in this effort. After all, Watson is generally regarded as a responsible, no nonsense, small-government lawmaker. Manipulating state government to benefit EPB's fiber-service scheme at the expense of its private, free-market competitors is not something that Watson would normally champion.

The next -- and possibly best -- opportunity to kill the preposterous legislation comes next Tuesday, March 5, when the bill comes before the Senate Commerce Committee. Hopefully the limited government, conservative-minded lawmakers in the committee will stare down EPB's lobbyists and put an end to this unfair, anti-customer, uncompetitive, big government pole attachment bill.

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gjuster said...

I would never consider using EPB as my cable provider regardless of the price. Private vs public is a no brainer.

February 28, 2013 at 9:31 a.m.
jjmez said...

EPB is not government. At least not in the sense this article is making them out to be. Like most privately owned and operated companies companies, they may receive subsidies of some kind and in some way (not sure on that or how) from the government, but so do Comcast, AT&T and other privately owned and operated companies.

=fear of competition?

February 28, 2013 at 10:44 a.m.
Gidget said...

EPB is not government? Are you kidding?

EPB is a city government agency. The mayor appoints the board of directors. EPB gets government bonds. If EPB fails to cover its expenses, city taxpayers have to bail the agency out.

Comcast and AT&T are private, independent companies. There is no comparison. Plus, AT&T and Comcast didn't get a hundred and something million dollars in federal stimulus handout like EPB. 

February 28, 2013 at 1:46 p.m.
Leaf said...

All I know is that I love my EPB service and I'm glad I switched from Comcast. Comcast consistently ranks as one of the most hated companies in America according to Consumer Reports. Don't make the mistake of thinking that Comcast doesn't benefit from government subsidies. They spend millions on lobbyists. And hundreds on newspaper columnists, apparently.

March 1, 2013 at 10:24 a.m.
dorkbean said...

The problem is not with the specific regulation, it's with the regulation in general. If other providers don't like a pole carriage fee, become a satellite provider. I understand a lot of the regulation is supposed to prevent monopoly and protect consumers, but it also means companies develop creative legal strategies instead of creative business strategies.

March 1, 2013 at 11:21 a.m.
timbo said...

The EPB are the biggest rip-off artists in history. They are government on steroids.

Drew, why don't you ask them what happens to our deposits when we pay when we get electrical service? Guess what, they keep it in a 60-70 million dollar slush fund FOREVER. Yes, as long as you have service they keep your money.

What do they do with it? Where does it go?

Drew, you need to look into this.

March 1, 2013 at 1:10 p.m.
inquiringmind said...

EPB FI is fast and reliable and reproducible - something I have never been able to say about Comcast, Verizon fiber or ATT DSL. Every time I drive down a street I see more people signed up for EPB. It provides a real benefit to the community to attract business and professionals all of which lead to more tax revenue for local and state governments. Comcast is a quasi-monopoly itself, and it could offer the same quality of service at the same price. Then it would get the business. If its competitor gets squeezed out, Concast is in the cat-bird seat, it can dish out whatever sloppy service it desired and the consumer suffers.

March 1, 2013 at 4:08 p.m.
gjuster said...

EPB could be the greatest service in the world - wouldn't matter - will not buy a government run business over a private business. Give a private business $150,000,000 or so and see how much better they would do.

March 1, 2013 at 7:13 p.m.
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