Bells' Fight in Texas Still Has Life

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The Texas state Senate Wednesday passed legislation that would allow SBC and Verizon to apply for statewide pay-TV franchises, eliminating the need to obtain permits in every Lone Star State municipality where they want to compete with cable. The vote occurred during a special session of the legislature and is identical to a version defeated during the legislature's general session. The special session allowed the legislature to debate a sweeping overhaul of Texas telecom laws.

The franchise provision must overcome opposition from municipalities and cable to pass the House before the special session ends next week. Unless the House version is identical to the Senate's, any differences in the bills would have to be worked out quickly. Policy analysts at Legg Mason's Washington research office gauged the bill's prospects for passage as "fairly good."

Besides helping SBC and Verizon, the bill would give momentum to other telephone company efforts to obtain statewide franchises around the country. What the Bells really want is a national franchise model that would eliminate the need to negotiate tens of thousands of pay-TV franchises as they roll out video service in the next few years. Absent a national model, however, they will settle for the statewide option wherever they can get it.

The cable industry opposes any deregulation of franchise obligations that doesn't also include the cable industry. Cities, on the other hand, oppose all efforts to erode their power to bargain for terms on franchise fees, service areas and other obligations.

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