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Reform Could Appear on Docket

Feb 20, 2006  •  Post A Comment

Major telecommunications legislation slated to be voted on by the Senate Commerce Committee next month is expected to include a provision to reform the nation’s existing system of local cable TV franchising, Sen. Ted Stevens said last week.

“We have to find a way to get away from this delay [that phone companies are experiencing as a result of the local franchising process],” the senator told reporters in the wake of committee hearings on the controversy regarding the franchising process.

Sen. Stevens, R-Alaska, the committee’s chairman, told reporters it was unclear how far a majority of his committee colleagues would be willing to push franchise reform.

But Sen. Stevens expressed sympathy for telephone industry arguments that the current process is stymying the introduction of phone company competition to incumbent cable TV operators-an argument that top telephone industry executives reiterated during the hearings last week.

In addition, Ivan Seidenberg, chairman and CEO of Verizon Communications, testified that incumbent cable TV companies in areas where Verizon is offering its FiOS TV service have cut prices to subscribers by anywhere from 28 percent to 42 percent.

“When the competition came in, the prices came down and the access improved and the consumer satisfaction went up,” Sen. Stevens said in his post-hearing session with reporters. “There’s no reason why the telephone companies shouldn’t be able to have better access to some of these areas where they have such high costs of getting delivery.”

During their testimony, Mr. Seidenberg and AT&T Chairman and CEO Edward Whitacre each vowed that their companies would pay the same franchising fees that cable TV operators pay to local governments, if lawmakers free them of the need to deal with the current franchising process. Thomas Rutledge, Cablevision Systems chief operating officer, testified that the cable TV industry believes it is important that its video competitors face the same franchise obligations that incumbent operators do, including commitments to serve all homes in a franchise territory, not just homes in the most affluent neighborhoods.

In addition, Mr. Rutledge said that Cablevision provides free video and Internet services to schools and libraries, and training for public access programs.

“Sustainable competition requires that new entrants embrace comparable franchise commitments,” Mr. Rutledge said.

“The truth is local franchising works,” Mr. Rutledge added.

Still, Sen. Stevens told reporters that he questions the cable TV industry’s argument.

“We gave cable special privileges when they entered the telephone system,” Sen. Stevens said. “I really don’t understand cable saying, no, we can’t treat telephone the same way when they start entering the cable business.”

Sen. Stevens also said that he expects the committee’s bill-which he anticipates will be approved by the Senate this year-will cover at least some of the points that Sen. John McCain, R-Ariz., recently announced that he planned to make in a bill to encourage cable TV to offer programming a la carte

During the hearing, Sen. McCain said his bill would swap “freedom from local franchising” to those who offered an a la carte option along with programming bundles.

Also last week, House Telecommunications Subcommittee Chairman Fred Upton, R-Mich., said the subcommittee will vote in March on House legislation that is also expected to address the video franchising issue.