Texas Legislature Passes Telco-Friendly Bill

Aug 15, 2005  •  Post A Comment

The video dreams of telephone companies Verizon Communications and SBC Communications got a big boost last week when the Texas Legislature passed a bill that would require video providers to obtain franchise rights at the state level, not municipality by municipality.

The bill, which is expected to be signed soon by Gov. Rick Perry, clears the way for the telcos to move more quickly in offering video to customers in the state. Several other states, including New Jersey, New York and California, have taken up the issue to varying degrees, though no official legislation has yet been introduced in those states. A bill in Virginia to offer statewide franchises to the telcos failed earlier this year.

SBC and Verizon had lobbied hard for the Texas Legislature to adopt the measure because it enables the telcos to avoid the arduous task of conducting negotiations with every jurisdiction in which they want to offer video service. Regional Bell Operating Companies such as Verizon and SBC find themselves under the gun to roll out their video service as quickly as possible because their core wire-line and long-distance businesses are shrinking as customers sign up for wireless services or cable-based telephony products.

Indeed, the passage of the Texas bill “represents progress toward removing a significant barrier to their planned entry into the consumer video market,” said Bernstein Research analyst Craig Moffett. He added that the Texas decision could serve as a model for other states mulling the statewide-franchise issue.