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Stevens Plans Legislation to Ease Local Franchising for Telcos

Feb 15, 2006  •  Post A Comment

Sen. Ted Stevens on Wednesday said he’s sympathetic to telephone industry criticisms of the nation’s current system of local cable TV franchising — and that he might move legislation this year to address the franchising issue.

“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],” Sen. Stevens, R-Alaska, told reporters following a Senate Commerce Committee hearing on the increasingly controversial video franchising.

During the hearing, top telephone industry executives reiterated concerns that the existing system of local franchising regulation is raising significant hurdles to their efforts to roll out video services that would compete with those offered by incumbent cable TV operators.

In addition, Ivan Seidenberg, chairman and CEO of Verizon Communications, said cable TV companies in areas where Verizon is offering its FiOS TV service have cut prices to subscribers by 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, chairman of the Senate Commerce Committee, 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 his company 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, chief operating officer of Cablevision Systems, testified that the cable TV industry believes it 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 Cablevision provides free video and Internet services to schools and libraries and provides training for public access programs.

“Sustainable competition requires that new entrants embrace comparable franchise commitments,” Mr. Rutledge said. “The truth is local franchising works.”

Still, Sen. Stevens told reporters that he was concerned about 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 said he expects the Commerce Committee’s bill — which the lawmaker said come up for a committee vote next month — 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 provide “freedom from local franchising” to those who offered an a la carte option along with programming bundles.