Competition: Welcome to the Cable Club?

While national cable trade associations such as CTAM and WICT have worked at purging their membership rolls of competing video distributors, at the state association level the qualifications for membership are sometimes curiously lax. Oklahoma-based overbuilder Pioneer Telephone Cooperative, for instance, holds the distinction of being both a cable competitor and a member of a state cable association. Pioneer joined the Oklahoma Cable & Telecommunications Association six months ago, despite overbuilding 70-plus central and western Oklahoma communities since mid-2004. Five other small telcos are members, including Cimarron Telephone. Oklahoma Cable & Telecommunications Association president Jim Walker says he’s OK with that. "We’re getting into their traditional phone business just as deeply as they’re getting into our traditional video business," Walker says. "We’re not afraid of competition." This situation is not endemic, but it’s not isolated either. Of five other state cable associations I contacted and asked whether they had telco members, one of those, Minnesota’s association, does. The others—the Arizona, Colorado, Florida and Indiana associations—don’t have telco members. What’s more, the Arizona, Florida and Indiana associations have bylaws prohibiting telco and/or overbuilder members. How and why would a state cable trade association allow entry to competitors in the first place? The need to bring in annual dues is one reason why some associations accept telco members, suggests Arizona Cable Telecommunications Association executive director Susan Bitter Smith. Dues-paying telcos compensate for income lost through the MSO consolidation of recent years, Smith says. The downside is that associations can run into trouble when trying to articulate their positions on key policy issues, such as state video franchising. "It may mean you do nothing, which is not always best," she believes. "Telcos might not be behind some things you do, but they support what you do in other areas, and that value balances things out," counters Minnesota Cable Communications Association executive director Mike Martin. "As for dues, that’s not a motivating factor. We accept telcos because they hold a valid cable franchise, and that’s our only membership qualification." In Oklahoma, Cable One GM George Wilburn isn’t happy about Pioneer’s OCTA membership. "If I had a preference, I would prefer them not to be there," says Wilburn, whose systems compete with Pioneer in Altus and Frederick. "Sometimes they [have access to] information that we’d prefer they not have."