Texas OKs Statewide Telco Franchises

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Texas legislators have given telephone companies what they wanted, passing legislation allowing them to launch video services without securing town-by-town franchises.

The bill had been opposed by cable operators, who have long been forced to secure a franchise for each city or suburb in which they operate.

The state senate approved the bill late Tuesday and the House signed off Wednesday. The bill has now been sent to to Gov. Rick Perry for his signature.

The legislation paves the way for SBC and Verizon to apply for statewide franchises to deliver cable-like video franchises. It also allows power companies to offer broadband over powerlines.

The phone companies have argued that a statewide, and preferably a nationwide, franchising model will advance the government’s interest in boosting competition to cable and increasing broadband penetration.

The cable industry doesn’t see it that way, arguing that sparing the telcos the regulatory hoops cable has had to jump through is unfair and that whatever regulatory breaks the phone companies are given should apply to cable too.

Cities understandably don’t like losing control of the franchise process and the potential of losing revenues they would otherwise collect from local franchise agreements.

At least two bills have been introduced in Congress to make it easier for telcos to launch video competition to cable, including one that would give cable its playing field.

The first, introduced by Sens. Jay Rockefeller and Gordon Smith, gives any phone company currently operating the right to add video without obtaining an additional franchise, though it would be subject to essentially the same franchising obligations as the cable system in the market it is entering.

More sweeping and controversial legislation was introduced just two weeks ago by Sen. John Ensign.
It would eliminate the need for cable, telephone company, or any other pay-TV provider to obtain local or state franchises.

Existing cable franchises also would be eliminated under his bill, which he said is designed to "update the nation’s telecommunications laws and increase choices for consumers."

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