Franchise Bill Gets Another Makeover

By John Eggerton -- Broadcasting & Cable, April 4, 2006

The House's national franchising bill has been modified to make it more palatable to Democrats, though not enough for ranking Democrat Ed Markey (D-Mass.)

As advertised, the bill, which is being amended Wednesday, will contain stronger anti-red-lining language (red lining is not serving lower income and other less profitable customers) and stronger enforcement power over violations of the FCC's network neutrality principles, which encourage nondiscrimination in the provision of Internet service.

The bill will require the FCC to adjudicate complaints within 90 days, up the fine for violations to $500,000 per, and give the FCC additional enforcement authority.

The bill also allows for periodic audits of the national franchisee to make sure they are paying their franchise and PEG (public, educational and government) channel fees.

House Telecom Subcommittee Chairman Fred Upton (R-Mich.) called the latest incarnation of the bill a Goldilocks solution. Some see the bill as too big, some too small, he said, while he saw it as just right.

House Commerce Committee Chairman Joe Barton (R-Tex.), who co-sponsored the bill, said it would "unleash the entrepreneurial spirit," while beefing up enforcement tools.

Barton, who has said the President will have a bill to sign by midsummer despite the waning legislative calendar and the need to reconcile it with a more broad Senate bill, said there would be a vote in the subcommittee Wednesday, and that it would be taken up by the full committee the first week after the Easter break.

Markey called that subcommittee vote the first significant one on "the fate of the Internet," which he asserted would suffer under the current bill, which he said will "stifle openness" and divide the country into "Internet haves and have nots."

Markey remains concerned about the bill's lack of buildout requirements for either new video entrants or cable incumbents once they, too, seek a national franchise. That, he says will allow companies to bypass some lower-income areas and to raise rates in others to subsidize competition for more lucrative customers.

The new changes to the bill, which will be introduced as a managers' amendment Wednesday, were outlined by Upton's office in the following:

With respect to PEG, the Manager's Amendment:

Modifies the bill to allow the FCC to determine the number of PEG channels a holder of a national franchise must carry not only in areas where there is no other cable operator, but also in areas where there are other cable operators but none have been required to carry PEG channels.

With respect to the definition of Gross Revenues, the Manager's Amendment:

Strikes the provision excluding from gross revenues the charges for managing the public rights-of-way.

With respect to Auditing, the Manager's Amendment:

Modifies the bill to allow the FCC to require national franchisees to file periodic reports with the FCC and the franchising authority for purposes of verifying compliance with the franchise fee and PEG/iNet contribution requirements.

Modifies the bill to allow the FCC or the franchising authority to audit the national franchisee's books and records once every twelve months to ensure accurate payment of the franchise fee and PEG/iNet contributions. The procedures will be determined by the FCC.

Modifies the bill to allow the franchise authority to recover its reasonable auditing costs if the audit reveals an underpayment of at least a certain percentage, to be established by the FCC.

-more-

Deems a fee to have been paid in full if not reviewed by a franchising authority within three years.

With respect to Definitions, the Manager's Amendment:

Out of an abundance of caution, clarifies the definitions in the bill to make sure that it is, in fact, applicable to certain providers of video service. This is in response to concerns raised by a number of diverse parties throughout this debate.

With respect to Anti-discrimination Enforcement, the Manager's Amendment:

Will add additional, strong anti-discrimination enforcement language.

With respect to the Enforcement of the Broadband Policy Statement and Principles, the Manager's Amendment:

Requires the FCC to resolve any complaint regarding a violation of the broadband policy statement and principles within 90 days.

Raises the penalty limit for a fine under this section to $500,000 per violation and ensures that the FCC has the full benefit of Titles IV and V of its enforcement authority.

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