Senate Tunes in IPTV

The Baby Bells converge on Capitol Hill today to sell a Senate panel on
clearing the regulatory decks for a rollout of IPTV, the Baby Bells’
fledgling alternative to cable television built on Internet Protocol (IP).

The cable industry and local regulatory agencies will be waiting in
opposition as the Senate Commerce Committee continues it weekly hearings on
telecom reform.

AT&T and Verizon are stringing fiber-optic
lines into homes delivering an IP network offering bundled television,
telephone and high-speed Internet to consumers. Both companies have pilot
projects operating in Texas.

The telephone giants want Congress to eliminate the local video franchising
requirements that the cable companies endured to enter local video markets,
contending their IPTV offering will lower consumer costs for pay television
by providing a competitor to cable to satellite services.

Verizon and AT&T are seeking single, statewide franchising agreements,
eliminating the need for individual negotiations with thousands of local

“The cable-franchising processes may have made sense 20 years ago in a
monopoly environment, but applying those processes to new entrants is merely
protecting consumers from lower prices,” Robert Quinn, AT&T’s senior vice president for
federal relations, stated in a Wednesday filing with the Federal
Communications Commission (FCC).

Cable companies such as Comcast and Time Warner currently must negotiate
local franchise agreements in every market where they deliver video content.

In addition to franchise fees, the cable companies typically must agree to
expand systems throughout each community. Most cable franchise agreements
also contain anti-redlining provisions.

“The existing cable-franchising process harms consumers by delaying —
sometimes for years — the ability of telephone companies to provide a
competitive alternative to the incumbent cable companies,” Quinn said. “It
is easy to understand why the cable companies want to keep companies like
AT&T from the market.”

Quinn noted that last week the FCC held a meeting a meeting in Keller, Texas,
where Verizon is rolling out its IPTV project. At the meeting, the FCC heard
testimony that cable prices dropped by 25 percent once Verizon entered the

Prior to Verizon’s arrival, cable prices rose 86 percent from 1995 to 2004.

According to AT&T’s FCC filing, when Ameritech attempted to enter the video
market in the late 1990’s, it took five years to negotiate 115 local
franchise agreements.

“At that rate, it would take 65 years to obtain all of the franchise we need
in order to complete the initial build portion [of their IPTV rollout],”
Quinn said. “It is time to remove those barriers to investment and

The cable industry contends it played by telephone rules when entering the
voice market and that the Bells should now play by cable rules since they
want to enter the video market.

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