The People v. Television: How Comcast is using cable to strangle democracy

ORIGINAL ARTICLE AT: http://www.sfbg.com/39/26/news_comcast.html

It took three visits to Gary Merrill Laufman's San Francisco home for Comcast technicians to get his cable service in working order. Laufman sat at home, waiting for hours each time � during work hours.

"One time," he told the Bay Guardian, "they didn't come at all."

Comcast eventually gave Laufman $120 in credit on his bill after he made a couple of calls to San Francisco's Department of Telecommunications and Information Services last May. The agency oversees Comcast's franchise contract with the city, which grants Comcast the right-of-way to string its cable lines along the city's utility poles and under its streets and is set to expire at the end of the year (see "Reinventing Cable," 2/2/05).

But what really riles Laufman is Comcast's expensive prices. "What's cable going to cost in two years � $70?"

Laufman's story is all too familiar to many San Francisco cable subscribers, who've seen their rates increase by 37 percent since Comcast bought out AT&T Broadband, the city's previous provider, and took over operations in November 2002.

"Just do a Google search on 'Comcast' and 'hate,' " Sydney Levy of Media Alliance suggested. So we did, and it generated 339,000 hits.

In fact, a 2004 American Customer Satisfaction Index survey found that Comcast � the nation's largest cable company, with 21 million cable subscribers nationwide and 70 percent of the nation's top 20 markets � has the worst customer satisfaction rating of any company or government agency in the country, including the Internal Revenue Service.

Even so, Comcast "surpass[ed] $20 billion in revenue for the first time" last year, chair and CEO Brian L. Roberts boasted when the company announced its year-end earnings Feb. 3.

So why is business still booming at Comcast? Deregulation and a set of favorable Federal Communications Commission policies � in large part, the result of the cable industry's lobbying muscle and healthy campaign contributions � have granted Comcast near monopoly power in 8 of the country's top 10 markets.

Comcast holds more than 100 franchise agreements in the greater Bay Area. Approximately 180,000 of San Francisco's 183,000 cable customers, or 98 percent of the city's cable users, subscribe to Comcast.

Now, just as San Francisco enters negotiations with Comcast to renew its franchise contract, the National Cable and Telecommunications Association (NCTA), the nation's major cable-industry lobby group, is coming to town for its annual conference, being held at the Moscone Center April 3 to 5.

So this is a fine time to highlight a few things everyone should know about the Bay Area's chief cable provider � including how it squeezes its customers, limits access to independent sources of information, and has launched full-scale attacks on labor and local governments.

All or nothing
A 2004 study by the Consumer Federation of America (CFA) found that Comcast's rates have skyrocketed by 50 percent � almost three times the pace of inflation � since the Telecommunications Act of 1996 further deregulated the cable industry.

Comcast spokesperson Andrew Johnson told us the increase was simply the result of customers "buying more content." What he didn't explain was that Comcast and the NCTA have resisted providing � la carte programming, through which customers could choose which channels they want. Comcast's standard service in San Francisco consists of more than 80 channels � including such exciting offerings as Jewelry TV and the Golf Channel � at a rate of $45.99 a month. Customers must pay even more if they want popular movie channels like HBO and Showtime.

This means Comcast essentially forces customers to pay for channels they may not want. The CFA found that 80 percent of those customers wouldn't pay for ESPN if they didn't have to. "I can do without the jewelry channel," Laufman said.

The CFA points instead to a lack of real competition as the root cause of exorbitant cable rates � and estimates that "the cost imposed on consumers by [cable's] abuse of market power is between $4.5 and $6 billion per year, compared to what prices would be in a competitive market."

Cable companies' ability to also provide Internet via their lines gives them a key advantage over satellite TV providers. And Comcast has been able to extract even higher returns by offering Internet discounts to cable TV customers.

The scheme has worked wonders for the cable industry, which has been enjoying a mushrooming share of the residential high-speed Internet market � including 63 percent of San Francisco's, according to Nielsen/NetRatings findings released in September, and 83 percent of residential DSL nationwide, according to the CFA.

Telecom analysts warn that traditional telephone companies will likely suffer even greater setbacks as Comcast and other cable providers begin offering telephone service via emerging Voice over Internet Protocol (VoIP) technology.

Content control
Perhaps more insidious is Comcast's control over what its customers see and read. Like its monolithic counterparts in the broadcast industry, Comcast has expanded vertically, buying up controlling interests in production facilities and using its advertising muscle to wrest exclusivity agreements from content providers.

"Cable operators are 64 percent more likely to carry the programming in which they have a majority ownership stake," the CFA found.

The trend is all the more harrowing when you consider the U.S. Public Interest Research Group's finding that cable is Americans' main source of news and entertainment.

"Comcast can make or break any potential program service or channel," Jeff Chester, director of the Center for Digital Democracy, told us. "They're able to exert all sorts of leverage, from dictating program formats to securing a significant minority, or even a controlling, financial interest."

But Comcast's rein over content reaches into the Internet, too, where � unlike telephone companies, which are required by law to grant equal access to competing ISPs � the company blocks competing service providers from accessing its cable lines and, thereby, its customers. Comcast could play favorites among different sites by making some available at higher speeds than others and even "outlaw devices [such as those used to download video and music] through acceptable-use policies," explained Ralf Muehlen, director of SFLan.org, which provides free wireless Internet access.

"It's certainly within their rights to do so under current federal regulations," he said. And any such moves would curtail the vitality of the Internet as a hub of the democratic exchange of information and ideas, making alternative, noncorporate viewpoints even less accessible than they already are.

The Wal-Mart of telecom?
Labor representatives say Comcast is so abusive in its employment practices that they've begun referring to the company as the Wal-Mart of the telecommunications industry. A recent study by American Rights at Work, titled "No Bargain: Comcast and the Future of Workers' Rights in Telecommunications" and released in June, uncovered some disturbing practices by the company, including depressed wages and a variety of union-busting tactics.

Salaries "are approximately one-third lower than the unionized telephone companies," the report reads. "Employee turnover and the use of temporary workers ... are twice as high as the telephone industry average.... Only one in four locations where a union exists have been able to obtain a collective bargaining agreement."

"We lost 2,000 members since Comcast took over AT&T," Communication Workers of America's Lisa Morowitz told us, adding that the figure represents "over half of the employees we represent at Comcast." CWA is one of only two unions that represent Comcast workers nationwide and the only one representing Comcast employees in California, she said.

Comcast's Johnson said his company has reached agreements with all its unionized shops in the Bay Area. Morowitz answered that Comcast was obligated to do so by federal law. "It doesn't change the fact that they've got [hundreds] of unfair-labor-practice charges filed against them," she said. "They fire and harass union employees. They've literally moved work from unionized to nonunionized locations."

Johnson refused to answer further questions about Comcast's labor practices when asked about Comcast's wage structure versus that of the telephone industry.

Sticking it to cities
Workers aren't the only ones who've found Comcast difficult to deal with. Increasingly, the company has been playing hardball with local governments during franchise-renewal negotiations. It sued the city of San Jose in 2003, arguing, in essence, that the negotiations process violates the company's First Amendment rights. The courts found against Comcast, but the company is now appealing the decision. In the meantime, it's been seven years since San Jose's franchise agreement expired.

Comcast filed suit against Walnut Creek Feb. 25 after the city said it wouldn't allow the company to upgrade its system until they reached an agreement on a franchise renewal.

One week earlier, Marin County residents lost access to KPFA-FM and other regional radio stations after Comcast stopped providing the FM radio service local listeners relied on to get radio signals otherwise blocked by the area's hilly terrain.

"It was a business decision that reflects the overwhelming needs of our customers," Comcast's Johnson argued, even though more than 200 people showed up at San Rafael's City Hall March 9 to protest the move in front of the Marin Telecommunications Agency.

Media democracy advocates say these are but a few examples of a nationwide effort, by Comcast and other cable providers, to undermine the local negotiations process and lobby against municipalities having a say in what they demand in return for granting cable companies the rights-of-way needed to reach customers in their communities.

In Philadelphia, where Comcast is headquartered and enjoys multimillion-dollar tax breaks, the company doesn't even provide for a single public access channel � a staple of most franchise agreements.

Fight back
As the expiration of Comcast's franchise agreement with San Francisco nears, local media activists are already holding informal meetings in local communities to gather public input they hope the city will use in its upcoming franchise negotiations with Comcast. The Department of Telecommunications and Information Services said it expects to launch formal town halls in mid-April.

Media Alliance is launching an online survey by April 3 � the first day of the NCTA's conference � for residents to sound off on Comcast's service and what they'd like to see come out of the city's negotiations, which the group will likewise submit as public comment.

But activists � including those with Media Alliance, CWA, Code Pink, and others � are also planning on making their presence felt as cable industry big-wigs and FCC representatives amass at Moscone Center, with a rally out front April 3, the first day of the NCTA conference.

"This is the time for people to speak up," Media Alliance's Levy urged. "And not just about what they don't like, but about what they want [from their cable provider] in the future." The "Stop Media Consolidation! Hold Comcast Accountable!" rally takes place Sun/3, 2 p.m., Moscone Center, 747 Howard, S.F. (510) 834-9415. To participate in Media Alliance's Comcast survey, go to www.media-alliance.org.