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FCC Adopts Franchise Rule Changes

3/05/2007 05:14:00 AM Eastern

The FCC Monday released its order adopting new video franchising rule changes it approved in December.
 
The changes should help telephone companies more easily secure video franchises, which the FCC says will help spur the broadband rollout and increase price and service competition to cable.
 
The FCC said the changes were in response to what it said were local franchising authority (LFA) conditions that were an "ubreasonable barrier" to competition to existing multichannel video providers.
 
Per congressional criticisms that the FCC was preempting Congress' authority--Congress failed to pass its own version of local franchise reform thanks to the network neutrality issue--the FCC Monday made it clear it felt it had the authority to make the changes based on its "broad rulemaking authority" in the COmmunications Act. It also cited more specific authority in the 1996 Telecommunicatoins Act revamp to "encourage broadband deployment by removing barriers to infrastructure investment," which it adds was upheld by the D.C. U.S. Court of Appeals.
 
The order puts a shot clock on franchise negotiations, prevents LFA's from denying franchises for refusal to agree to "unreasonable" build-out requirements or to undertake "certain obligations relating to public, educational or government channels; says LFA's cannot refuse to grant an LFA based on "non-cable services," and preempts local laws that allow LFA's to do any of the above.
 
The FCC also asked for input on how the new rules should apply to incumbents, i.e., should they get the same relief from LFA conditions when their franchises come up for renewal, or even before. The commission also asked for comment on how local consumer protection and customer service standards fit into the new regulatory regime.
 
Not surprisingly, AT&T and Verizon, which are both rolling out video services in competition to cable and pushed for the failed national legislation, praised the new rules. "As today’s Order makes clear, the FCC wisely determined that consumers benefit from the rapid deployment of bigger, faster and smarter broadband pipes that deliver video choice for consumers," said AT&T Senior VP Robert Quinn.  "We applaud the FCC’s efforts to promote for consumers alternatives to the incumbent cable companies."

“The FCC’s Order establishes reasonable timeframes for localities to negotiate the terms of competitive entry for new video providers.  As AT&T continues to aggressively deploy the only 100% IP-based TV service in the nation, we will continue to abide by our obligations, such as respecting local management of rights-of-way, support for franchise fees, and delivery of public, educational and government programming.”
 
Marilyn O’Connell, chief marketing officer of Verizon Telecom, added: "This decision removes obstacles to the continued aggressive rollout of our all-fiber-optic network and our FiOS TV service. It means that we will be able to reach our goal of rapidly expanding the number of consumers who have a choice of video service providers."

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