Texas Cable Operators Sue to Block State Franchising for Phone Companies

Sep 9, 2005  •  Post A Comment

In a move that could throw cold water on the phone companies’ plan to roll out video services in Texas, cable operators there filed a federal lawsuit seeking to block a law that would have allowed the phone companies to obtain franchise clearances at the statewide level instead of locality by locality.

The suit was filed jointly by 15 cable companies doing business in the state, including Time Warner Cable and Cox Communications. The suit, which was filed Thursday in a federal court in Austin, Texas, argues that the new rule, which was signed into law this week by Texas Gov. Rick Perry, would encourage the phone companies to only deploy video services in wealthier communities.

Phone companies have argued that the law encourages competition by allowing the phone companies to more quickly ramp up their deployment of their video product, which would offer customers more choice for their video provider.

SBC Communications and Verizon Communications, both of which do business in Texas, had pushed for the legislation to pass and hope other states wrestling with the issue will follow Texas’ lead. Both companies are updating their networks with fiber-optic lines capable of carrying video, voice and data.

The ability to obtain a statewide approval to offer video service has been seen as a huge boost to the phone companies’ video dreams because it means avoiding the arduous task of obtaining approvals from every city and town in the state, which would likely cool the companies’ aggressive growth plans.