Telcos Granted Video Franchising Relief
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Verizon and AT&T won a major victory Wednesday afternoon with the Federal Communications Commission (FCC) voting 3-2 along party lines to streamline the video franchising process for competitors to incumbent cable companies.
The decision allows Verizon and AT&T to run their multi-billion dollar IP fiber-optic networks into homes offering bundled television, telephone and high-speed Internet to consumers without having to meet the same regulatory obligations that cable companies do.
The FCC hopes the new rules will provide pay television competition to cable companies and, in the process, speed the rollout of broadband.
"The ability to deploy broadband networks rapidly is intrinsically linked to the ability to offer video to consumers," FCC Chairman Kevin Martin said. "Quite simply, the ability to sell video services over these fiber networks may be a crucial factor in getting those fiber networks deployed."
Martin said that as Verizon and AT&T began to offer their new video services, "We began to hear that some local authorities were making the process of getting franchises unreasonably difficult, despite clear statutory language."
The new rules pre-empt most of the power of local franchising authorities (LFAs) to dictate the terms and conditions to distribute video in a community, including curbing LFAs' ability to dictate build-out provisions. The rules also direct LFAs to approve or deny video franchises within 90 days of an application.
The pre-emption orders only apply to communities that have not yet adopted video franchising laws. Texas, California, Indiana, New Jersey, Michigan, Virginia, Kansas, North Carolina and South Carolina have already passed laws establishing statewide video franchises.
"I am pleased that we recognize -- and do not pre-empt -- the actions of those states that have reformed their franchise rules. Their efforts to streamline the process for competitive entry are laudable," Commissioner Robert McDowell said.
The two Democrats on the FCC Michael Copps and Jonathan Adelstein voted against the rules, protesting that the build-out provisions in particular will allow telephone companies to pick and choose areas to deploy their services.
"My goal was to encourage an item that preserves a local authority's statutory right to seek specific and far-reaching build-out requirements and maintains truly meaningful local ability to deal with the huge companies that are coming into our cities and towns to build important infrastructure," Copps said.
Copps added, "The item before us today doesn't get us there and I cannot support it as written."
Both Copps and Adelstein also predicted legal challenges to Wednesday's order and a backlash from Congress, which considered similar provisions in a telecom bill that passed the U.S. House but never came to a vote in the Senate.
"[It] is certain to offend many in Congress, who worked long and hard on this important issue, only to have a Commission decision rushed through with little consultation," Adelstein said. "The result will be heavy oversight after-the-fact, and a likely rejection by the courts."
AT&T rushed to praise to the decision, issuing a statement shortly after the FCC vote.
"We are heartened that the FCC, just as nine states, has recognized that the existing local franchising process limits consumer choice and investments in broadband infrastructure," said Bob Quinn, senior vice president of federal relations. "The FCC has taken steps towards streamlining the franchising process by establishing reasonable timeframes within which local franchising authorities administer their responsibilities."