States Poised to Ease Franchising

Mar 6, 2006  •  Post A Comment

The telephone companies’ quest to simplify the country’s video franchise licensing procedures moved closer to becoming a reality last week after lawmakers in two states passed bills easing the process and a key congressional leader voiced support for coming up with a national mechanism to issue franchise licenses.

The legislatures of Virginia and Indiana each passed bills last week that would make it easier for companies such as AT&T and Verizon Communications to obtain video franchise licenses. Each bill is awaiting the respective governor’s signature.

Indiana’s bill would allow telcos to obtain state-issued franchise licenses within 15 days of applying, and incumbent cable companies would fall under the new rules as well. License applicants can also freely designate the territory that they want to serve.

Virginia’s bill differs in that it simply expedites the franchise approval process while leaving it to local municipalities to approve issuing the licenses. Under the new rules local governments would have 75 days to approve a video franchise application. Verizon officials said legislation supporting a statewide franchising mechanism would have required a change in the Virginia Constitution, which gives local governments control of right-of-way issues.

If passed, both states would join Texas in approving legislation that simplifies the process of obtaining government approval for offering video to consumers in local markets. Other states that are examining the issue include South Carolina, Missouri, Kansas, New Jersey and California.

Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association, gave last week’s developments a mixed review.

“The Virginia legislation is a step in the right direction,” he said in a statement. However, he was much more critical of the Indiana legislation, saying that “If the goal is promoting broadband for all, this special-interest legislation clearly fails.”

The developments in Indiana and Virginia come as the telcos are also seeing movement on the national level. Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee, said last Tuesday that he supports reforming video franchising rules that make the process national instead of local, and plans to introduce legislation soon that supports that effort.

Both AT&T and Verizon are betting big on video services as a way to counteract the effects of declining wire-line and long-distance businesses. The companies have spent billions of dollars in the past few years upgrading their telephone networks with fiber-optic technology that enables the delivery of video and high-speed data to residential customers.

However, the process has been slowed by current video franchising rules, which require the telcos to negotiate with each municipality where they want to offer their video service, a long and arduous process that most analysts agree would likely delay the telcos’ ability to recoup their fiber investment.

To help speed that process, AT&T and Verizon each have been lobbying hard in various states and in Congress to change the franchise rules, often meeting with stiff resistance from the cable industry.

But the companies are using different approaches too. While AT&T officials have maintained that they should not have to go through the local franchising process, and as a result have not sought to obtain local franchises, Verizon is deploying a dual track of obtaining local franchises while simultaneously lobbying state and federal lawmakers to change the rules.