Franchises Being Delayed, Justice Tells FCC


The Justice Department has advised the FCC that it believes some local franchising authorities (LFAs) are imposing unnecessary costs on new entrants and slowing the rollout of new services in competition to cable.

As part of its recommended remedy, Justice says LFA's should not be allowed to require new video providers, like telcos, to meet the sort of build-out requirements that have been required of the cable industry. Telcos have been pushing for that freedom from lengthy LFA negotiations. In fact, Justice cites some Verizon arguments in its comments.

Those comments to the FCC came in the commission's open proceeding on whether local franchising authorities are levying unreasonable demands that are holding up the franchise process, Justice said that "in light of the significant entry-deterring effects of mandated build-out requirements, the Department believes that LFA's should not be allowed to impose any such requirements except where necessary to prevent income discrimination," which is already illegal.

It said the FCC's presumption should be that a phone company planning to provide video service only to existing phone customers is not denying service to anyone else because of income--so-called 'red-lining.'

The FCC opened the issue up for comment after telephone companies and others argued that their attempt to get into the video distribution business were being impeded by unreasonable demands of local franchising authorities (LFAs).

Mirroring, in part, a House telecommunications reform bill that would establish a nationwide video franchising scheme, Justice advises the FCC to 1) introduce a shot clock for franchise negotiations; 2) circumscribe what LFA's can require--Congress put no limits in the 1992 Cable Act; and 3) establish nationwide guildelines on what constitutes "unreasonable" refusal to grant a franchise.

National Cable & Telecommunications Association spokesman VP, Communications, Brian Dietz responded: "We are reviewing the Justice Department ex parte filing.  However, for the past year NCTA has suggested that changing the current law to provide for a streamlined franchising process makes sense and proposed the shot-clock approach for approval of franchises. We have also advocated that any changes to federal law should treat providers of like services alike so some providers do not have an unfair competitive advantage."