As New Jersey cable-deregulation bill advances, critics sound alarm

State regulation of the cable and telecommunications industries in New Jersey would be scaled back under a bill moving through the Legislature, prompting critics to warn of possible rate hikes.

The legislation comes as bundled cable and broadband packages have become commonplace, and consumers have moved from telephone landlines to cellular phones and Web-based voice services.

Industry executives say the state's telecommunications regulations are arcane and hinder modernization and competition in the digital age. But critics, including the state's advocate for ratepayers, see the proposed regulation changes as an opportunity for cable and telephone companies to raise rates and cut back customer service.

"I believe this bill goes further in terms of cable deregulation than any other state," said Stefanie Brand, director of the New Jersey Division of Rate Counsel. "It's going to be seniors and low-income people who are most affected."

While deregulation of the cable and telecommunications industries in New Jersey has been steady over the last decade, the state retains rate control over two increasingly marginal sections of the market: basic cable service and landlines. About 1 million households use basic telephone service - the industry says it's about half of that - and 3.3 million basic cable, according to Brand.

Companies must go before the Board of Public Utilities to raise rates on either service; in cable's case an exception is made in towns where the federal government has deemed an acceptable level of competition among providers.

Those regulations, as well as a provision addressing customer service for cable and telephone, would be done away with under the proposed bill.

Industry representatives paint the last regulatory structures as holdovers from an era when cable and telephone companies operated as monopolies and say they have no place in today's competitive environment.

"If you no longer have concerns about monopolies, you no longer need the strong hand of government," said Karen Alexander, president and chief executive officer of New Jersey Utilities Authority, a trade group that represents telecommunications companies.

A report set for release Monday by New Jersey Policy Perspective and Demos, nonpartisan research groups, predicts landline customers could see their bills climb $100 a year, based on recent events in California after similar deregulation. New Jersey customers with Verizon, the state's largest telephone provider, currently pay between $16 and $24 a month for basic service.

But the doomsday scenarios presented by critics are unlikely, the industry maintains.

In the case of cable service, critics worry that deregulation would mean company practices such as crediting customers for service outages would disappear. But Mark Nevins, spokesman for the New Jersey Cable Telecommunications Association, an industry trade group, said such a move would ultimately lead to a loss of customers, something no company would be willing to risk.

"Consumer protection still exists at the federal, state, and, perhaps most importantly, the consumer level. They're empowered to vote with their subscriptions," he said.

In New Jersey, cable and telecommunications companies are major political donors. The three largest providers to be affected by the legislation, Comcast, Verizon, and Cablevision, have donated more than $1 million to Republican and Democratic campaigns since 1998, according to campaign-finance records.

When the legislation moved through the state Assembly, advocacy groups went on the warpath. Senate President Stephen Sweeney (D., Gloucester), a sponsor of the Senate bill, then held up the legislation's consideration for further review.

Sweeney remains a passionate proponent of the bill, saying it would mean lower rates for customers.

"It's about competition, pure and simple," he said. "Anybody that opposes legislation makes the worst-case scenario. That's not what happened with auto insurance [after deregulation]. It got much more competitive and prices went down. It's not like these companies are friends."

Despite such assurances, many remain fearful that, free of government regulation, cable and telephone rates will continue to rise.

Between 1995 and 2009, the cost for cable in the United States rose 139 percent, more than triple the rate of inflation, according to the Federal Communications Commission.

Susan Baratz, 69, of Manchester Township, said that her bills were already too high and that if they went any higher, she might have to think about canceling service.

Between taking care of her 94-year-old mother and her son, who suffers from seizures, canceling the telephone would be a last resort. But the Food Channel and other programming Baratz enjoys could soon be gone.

"What would I do if something happened, stand outside and scream?" she said. "The rates have always been going up, but it seems to me it's an epidemic the last few years and it's been spreading to everything."