Barton Bill to Boost Telco Video
MARCH 28, 2006
http://www.lightreading.com/document.asp?doc_id=91564&print=true
The House Commerce Committee Monday evening released a scaled-back version
of its telecommunications bill, which, among other things, creates a
national video franchise. This would replace the current franchise system,
which requires phone companies to ask individual cities and states for
permission to offer television services.
Committee staffers say the new bill will soon be formally introduced, then
will likely be fast-tracked by the Committee. The Committee has already
scheduled a Thursday morning hearing on the bill.
The scope of the bill has narrowed dramatically since its first drafts
appeared last fall. Once a sweeping revamp of the 1996 Telecom Act, it now
is limited to four main issues. It creates a national video franchise, sets
some rules for E911 service, provides some vague language on network
neutrality, and touches on municipal broadband networks. (See New Telecom
Bill Draws Raves.)
The legislation has undergone a name change, too. During its draft phases,
it was known as BITS (Broadband Internet Transmission Services) but has now
been dubbed the Communications Opportunity, Promotion, and Enhancement Act
of 2006, or the COPE Act. (See BITS Bill Bites on Video Franchise.)
The national video franchise is clearly the bills centerpiece. "The notion
behind America's cable laws is that competition doesn't exist, but with new
competitors preparing to enter the ongoing race between cable and
satellite, the law needs to change," said Commerce Committee Chairman Joe
Barton (R-Texas) in a statement Monday night. (See Senate Commerce
Committee Holds Hearing on Video Franchising.)
In general, the bill states that a video provider can operate under a
national franchise in a given market if there is at least one competing
provider there. Video providers will continue to pay a local franchising
fee of 5 percent of their gross video revenues.
Video providers would also be required to provide capacity for public,
educational, and governmental use, and pay an additional 1 percent of gross
revenues to fund that use. The term of the national franchise would be ten
years.
The passage of a law creating a national franchise would be a huge break
for telcos, which are just beginning their push into the video business.
Such a provision would relieve telcos of the hassle and cost of obtaining
local video franchises in most of the markets they want to enter.
The bill strikes the right note of accelerating video choice for
consumers, said AT&T Inc. (NYSE: T - message board) spokesman Tim McKone.
We look forward to working with the full Committee to see this bill
enacted into law.
AT&T and Verizon Communications Inc. (NYSE: VZ - message board) have spent
millions in Washington lobbying for a national video franchise.
Verizon spokespeople werent immediately available for comment Monday evening.
The cable lobby can also declare victory over the Barton bills contents.
Until very recently, the bill contained special pricing rules for telcos
entering the video space. For example, a recent draft prescribed that until
the telcos reached a 15 percent market share in video, they could target
attractive neighborhoods with low prices. Meanwhile, the cable operators
would be required to adhere to a standard price point across the community.
Under intense pressure from Democrats, the cable lobby, and other advocacy
groups, the Commerce committee excised the "15 percent" rule from the bill
at some point during the past week.
"Earlier drafts of the House bill focused on picking winners and losers on
the basis of technology, and we are pleased that focus has now changed,"
National Cable & Telecommunications Association (NCTA) CEO Kyle McSlarrow
said in a statement Monday.
As expected, the Barton bill doesnt dig too deeply into the issue of
network neutrality. It simply restates the principles adopted by the
Federal Communications Commission (FCC) in a ruling last August, which in
itself is a victory for the phone companies. Under these principles,
broadband carriers are forbidden from blocking or impairing any legal
Internet traffic, but are not expressly precluded from charging content
providers QOS fees to guarantee the fast delivery of content.
Senator Ron Wyden (D-Oregon) said in a statement Monday that the Barton
bill doesnt go nearly far enough to preserve network neutrality. "This
legislation begins the construction of a multi-layered, toll-strewn
information superhighway that is out of sync with what has made the
Internet work - access for all."
Wydens own piece of network neutrality legislation, the Internet
Non-Discrimination Act, forbids broadband operators from giving
preferential treatment to content from a given provider in exchange for a
fee. (See Net Neutrality Debate Wydens.)
In one of its most detailed sections, the Barton bill lays out the
responsibilities of VOIP providers and traditional telcos in the provision
of VOIP E911. The bill would write into law that "Internet voice providers"
must deliver full E911 access to consumers, but would also place
requirements on the operators that act as gatekeepers to the E911
infrastructure: "Each entity with ownership or control of the necessary
E911 infrastructure shall provide any requesting VOIP service provider
with nondiscriminatory access to such infrastructure."
On the municipal broadband issue, the bill states that cities cant be
prevented from owning and operating communication services. However, local
governments would be prohibited from giving preferential treatment to their
own services at the expense of others operating in the market. (See
Municipal Broadband Networks.)
Mark Sullivan, Reporter, Light Reading
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