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DEMAND FREE BASIC

Omaha Should Demand Free Internet and Free Digital Basic
By Frances Mendenhall

The author is the founding member of Independent Television Omaha, a consortium (i.e. provider of public access television programming), which broadcasts on digital 109, part of the Cox digital basic lineup.

Omaha should look at what other cities are getting from their cable providers and demand that Cox provide free Internet and free digital basic television service.

Cox is now charging close to $30 for digital basic service. This is almost twice as much as they get for analog basic service.

The signal for digital television, however, uses only a fraction of the bandwidth that is needed to send out the analog signal, one-twelfth, to be exact. And, as Cox has repeatedly reminded Omaha in the recent negotiations over public access channels, it’s all about the bandwidth. They make their money by selling bandwidth--whether to business customers for high speed Internet--or to households for television, phone, and Internet services.

Cox is taking advantage of two things. First, the transition in the television world that is underway from analog to digital, and, second, the public perception that since digital is better, it’s appropriate for customers to pay more for it.

The transition, mandated by the FCC, will be completed by March 1, 2009, when all broadcast channels must send out digital signals only. At that time, we should not be surprised to find Cox ending their analog service entirely, but, perhaps, to serve their customers who only have an analog television, offering to rent out a converter. They will do this in order to free up huge amounts of bandwidth, but they will probably tell us that their reason is to give their customers more of what they really want. At that point, Cox will be faced with a windfall opportunity because their available bandwidth, the way they make the most money from business customers, will skyrocket.

Serious believers in the idea that real costs should be assigned to those who benefit from those costs, should be demanding that digital services should cost one-twelfth the rate assigned to analog customers.

Unfortunately, however, most people simply think that the issue is “too complicated” for ordinary people to understand, and Cox loves nothing more than letting that misperception persist. Actually, anyone can understand the one relevant fact: the digital signal, what Cox is selling, requires only one-twelfth the bandwidth needed to send out an analog signal.

Could we realistically expect Cox to charge digital customers one-twelfth the rates paid by analog customers? Of course we can expect Cox to point out that there are administrative and programming costs to consider in addition to the cost of the bandwidth. But administrative and programming costs for analog customers should be nearly identical to administrative and programming costs for digital customers. Based on the value of what customers are getting, there is no way to justify Cox’s current practice of charging digital basic customers twice what analog basic customers are charged.

It is time for a serious review of what Omaha is getting in exchange for the use Cox gets of our public right-of-ways that the cable occupies. Clearly, when the transition is over in March, 2009, digital basic television services should emerge as the “entry level” tier, and the rates should reflect Cox’s extremely low bandwidth costs, especially if Cox gets rid of its analog signal at that point. Their television bandwidth costs will be dirt cheap, and they should make the basic tier of digital television service available to Omaha for a fraction of the current $30 now being charged. In fairness, the city could even be demanding digital basic services free: recall that when Cox first sought the franchise, back in 1980, they promised that the basic tier of television service would be provided free.

The time is also right for Omaha to consider all its options, and not just how much gravy to give Cox. The company’s contract expires in September, 2011, and the negotiation of the new contract is already underway. Omaha should seek bids from other providers. Why can’t Omaha, for example, have what Philadelphia has: wireless Internet in most places in the city with a low monthly charge of $10 in places where wireless is not available. Why can’t we have what Cox provides Tucson, an independently operated public access center with 14 full time employees, that is paid for by allocations from Cox’s profits. And, most of all, why can’t we have just one of the many things Cox promised back in 1980, free basic service.

In the spring of 2009 Omaha will be electing city council members. Every incumbent and challenger should be considering how Omaha can get the best broadband service out of the contract renewal negotiations. Omaha’s previous leaders sold the city short; it is time for Omaha to enjoy what other cities have.