Tuesday, August 02, 2005

Calculating Calamity

I spent some time yesterday crunching numbers. I was trying to figure out how many potential households a particular video program could reach in the cities where it was being carried on cable systems.

It was pleasing to estimate that for the one hundred and forty two communities the program was being carried, some 8.2 million households would be reached. These were franchise areas that ranged from 3,300 subscribers to over 700,000 subscribers. A wide variance of numbers to be sure, with teeny tiny towns to large metropolitan areas. Then it occurred to me that my numbers equaled real dollars to be lost in the national franchising scheme proposed by Mr. John Ensign (R-Nevada) in his frenzied attempt to bail out the telephone companies.

Just in these 142 cities and towns the sum would be at minimum $25 million each and every month or $300 million per year. According to the National League of Cities there are 19,429 “municipal governments” in the United States so my little calculation represents less than 1% of the total. My numbers are skewed because there are places like Houston on my list but I also have places like Cedar Hill, Texas. Ever been to Cedar Hill? Me neither.

But ain’t the Federal Government going to collect a 5% franchise fee? I’d love to dignify that speculation with a response but just don’t seem to have the juice for that today.

Ensign said in his floor statement that we should consider the amount of GDP growth that will be generated in the next five years if we update our laws. He said that growth will be $634 billion dollars. Ensign then cited the 212,000 new jobs that would be created by decimating telecom regulation. Those 212,000 new jobs at the $634 billion dollar figure comes to roughly $3 million for each and every one of those jobs. $600,000 per year for each of those jobs would seem to guarantee they’ll be mostly management positions.

Those figures come directly out of the United States Chamber of Commerce report released last October and widely vamped throughout the country at seminars, conferences and sympathetic web sites. Which goes to show if you say something often enough it eventually becomes true and it’s even more true when you can get a Senator to say it on Capitol Hill.

Meanwhile Houston stands to lose around $30 million a year in franchise fees. St. Louis could lose $20 million. Aurora will lose about $1.2 million. Tumwater will lose about $147,000 and Cedar Hill will be out $118,000. So the 212,000 new jobs that will be created could easily be offset by cities and counties having to lay off people in order to make up for the lost franchise fees. It would only take an average of eleven people per city and county being laid off to destroy Ensign’s grand plans of job growth through corporate subsidy. Losing eleven staff in Tumwater might seem like a lot but you’re going to have to really swing the axe in places like Houston to make up that $30 million shortfall.

But the Feds will be collecting those franchise fees and doling them back out to the local community. See paragraph four above.

You’d think the gaming industry that fills Ensign’s pockets with campaign contributions would be telling Ensign to cool it. Less money going to municipalities, more money out of taxpayers’ pockets, fewer opportunities for grandma to try her hand at Roulette. Course the casinos could be hedging their bets on those 212,000 people who will be bringing down $600,000 per year in those new jobs.

The upside of this bill is that Ensign guarantees that local governments will still be able to manage their rights of way and he guarantees that there will “still be a local point of contact if consumers have problems.” Maybe that’s where those new jobs will be created. So instead of the elimination of regulatory positions (since there won’t be anything to regulate) there will be the creation of a whole new vocation, LPC’s or Local Points of Contact. And at $600,000 per year starting salary I’m thinking about dusting off my resume just in case the LPC thing really takes off. Viva Las Vegas!

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