Telcos Push Franchise Revamp Up Hill But Cable Says Changes Would Tilt Playing Field
By Ted Hearn MultiChannel News 2/20/2006 http://www.multichannel.com/article/CA6308722.html?display=Top+Stories Washington Congressional panels will soon try to relax cable-franchising rules for telephone companies that want to get into the video business. And they are likely to respond directly to complaints from AT&T Inc. and Verizon Communications Inc. that the current municipal process is dysfunctional, since winning a local franchise can take months and can sometimes require funding the construction not just of a new communications network, but such things as traffic lights and football fields as well. Senate Commerce Committee chairman Ted Stevens (R-Alaska) in particular is working on developing a bill which might go to a vote in his committee in March that would rewrite major pieces of the nations telecommunications laws. As part of that rewrite, Stevens is expected to reduce local barriers and bar local governments from demanding any non-communications-related amenities in franchising agreements. That may be a change in the playing field that cable operators who, for decades, have been required to pay for such amenities in their thousands of franchising agreements across the country will find unfair. But Stevens is unmoved. We gave cable special privileges when they entered the telephone [business], Stevens said last Wednesday after a committee hearing on franchising rules. I really dont understand cable saying that we cant treat telephone the same way when they start to enter the cable business. House action on telecommunications law is also coming up soon. Draft bills circulated by Rep. Fred Upton (R-Mich), chairman of the Telecommunications and the Internet Subcommittee, and Joe Barton (R-Texas), chairman of the Energy and Commerce Committee, would establish a largely deregulatory regime for providers of what the bill calls broadband Internet transmission service, or BITS. Upton wants a bill to clear his committee by Easter (April 16). If the phone giants score big, they might even be able to selectively pick where they roll out their video services. That would mean they could target their investments to areas where cables best customers live, while cable operators would be weighed down by local pacts that require constant servicing of every household in a community. Stevens said he expected to oppose forcing phone companies to offer video throughout a community, under a government-imposed timetable. That prospect clearly doesnt sit well with cable-system operators. [AT&T and Verizon] want to serve only limited parts of communities. Thats a very unfair thing for the existing entrenched operator [for the phone companies] to have that opportunity, Cablevision Systems Corp. chief operating officer Thomas Rutledge told the Senate Commerce Committee last Wednesday. The relaxed rules could come just when cable operators are seeking a return on $100 billion they have spent since 1996 to add digital video capacity to their systems and make high-speed Internet access available to 105 million U.S. homes. But the clash comes as AT&T and Verizon are spending billions over the next few years to deploy fiber-rich networks that they hope will exceed the capabilities of cable networks in delivering advanced voice, video and data services. The time for a national, streamlined franchising process is now because the era of broadband video is here, said Verizon CEO Ivan Seidenberg, who accused cable companies of sending their lawyers to impose on Verizon a laundry list of onerous obligations to slow negotiations. Rutledge said, in effect, that the phone companies could be getting returns now, if they worried less about getting preferential rules and just started building. The only thing slowing down Verizon is Verizon. And the only thing slowing down AT&T is AT&T, Rutledge said. In the Commerce Committee hearing last week, Senate Republicans and Democrats suggested that local franchising is outdated and should be replaced by a system that creates a nationwide or statewide right of entry for both phone and cable companies. It is important to note that cable operators do not have to comply with the legacy phone regulations for their voice services. Likewise, telephone companies should not have to comply with legacy cable regulations for their video services, said Sen. Gordon Smith (R-Ore.), whose bill (S. 1394) would effectively eliminate video franchising for incumbent phone companies. Making it easier for phone and other companies to enter the video business is seen as a way to drive down prices, through competition. Some national legislators believe that the statewide franchising enacted in the state of Texas forced Charter Communications Inc. to slash its rates in Keller, Texas, where Verizon has entered the multichannel video services business. I believe the franchising process needs to be looked at, needs to be streamlined, said Sen. Ben Nelson (D-Neb.). But Sen. Frank Lautenberg (D-N.J.) argued, New providers shouldnt be able to cherry-pick pick off the wealthiest consumers and forget about the rest. Paul Gallant, a media analyst with Stanford Washington Research Group, said passage of a major telecommunications bill was a long shot, because of the intensity of the franchising dispute and the shortened legislative calendar in an election year. A bill dealing just with franchising, an approach favored by Verizon, has some chance of success, he said. There does appear to be a some hope that a stand-alone franchising bill could move, at least on the Senate side, Gallant said. There is no indication yet that key House members are interested in a stand-alone franchising bill. Under current law, all cable companies need to ink contracts with local governments largely in order to gain access to rights of way and pay 5% of cable service-related revenue as compensation. The law also mandates the provision of cable service to everyone in the community, regardless of income, within a reasonable period of time. Whether the Senate will address the issue directly is not clear. I don't think we need to talk about build-out requirements, Stevens told reporters. If the Barton-Upton draft bill were enacted, no BITS provider would need approval from a local government to build facilities and sell services. But Upton would not say whether those provisions would remain in the bill his committee was preparing. -----------------------------[BOXED FEATURE]------------------------------ Trading Places Who wants what in House and Senate franchising bills: Sens. John Rockefeller (D-W.Va.) and Gordon Smith (R-Ore.): No video franchise required for phone companies already authorized to occupy rights of way to provide phone service. Status: (S. 1394) Video Choice Act of 2005. Sen. John Ensign (R-Nev.): Neither franchise nor buildout requirements may be imposed on any video service provider. Status: (S.1504) Broadband Investment and Consumer Choice Act of 2005 Sen. John McCain (R-Ariz.): Freedom from local franchising requirement, in exchange for requirement to offer channels of programming on an a la carte basis. Status: Bill introduction pending. Reps. Joe Barton (R-Texas) Fred Upton (R-Mich.): No franchise required for providers of broadband Internet transmission service (BITS). Status: House draft legislation. SOURCE: Multichannel News research ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
