Telcos’ Video Entry Rings in Cable’s Ear

Apr 10, 2006  •  Post A Comment

For Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association, there’s a silver lining to the House telecommunications subcommittee’s passage week of legislation that would ease phone companies’ launch of pay TV services: It didn’t come out as bad for cable as it could have.

“We’re getting to a much better place with this bill,” said Mr. McSlarrow in a hallway interview.

But on the eve of NCTA’s annual convention in Atlanta, it was hard to perceive the 27-4 subcommittee vote as anything but a win for phone industry efforts to roll out video without having to go through the same local franchising process that incumbent cable TV operators had to go through to launch existing cable systems.

“We view the panel’s actions as a victory for the Bells in their quest for national franchising,” said Blair Levin, an analyst for Stifel Nicolaus.

In a statement last week, NCTA said cable operators were “very pleased” that the lawmakers voted to include a provision in the bill that would give cable the right to hook its own telephone services into the phone industry’s public switched networks.

“This is a significant step forward for voice competition in the U.S. and will enable cable and other Internet phone providers to finally break the Bell companies’ tight grip on this marketplace,” the NCTA statement said.

In the wake of a lobbying counterattack, the cable TV industry also succeeded in deleting key measures from the legislation that could have severely tilted the playing field in the phone industry’s favor, including one that could have prevented cable from adjusting pricing in areas where the phone companies invade cable’s video turf.

Measures in Works

The measure approved by the subcommittee last week would allow cable companies to switch from local to national franchises after a phone company launches video services in their area. But an amendment approved by the subcommittee also makes it clear that an incumbent cable TV operator’s right to switch from a local to a national franchise hinges on whether a phone company or other new entrant is providing a competitive service in its market.

Another amendment would give the Federal Communications Commission the right to issue fines of up to $500,000 to telephone or cable companies that use their power over their broadband networks to discriminate against rival content providers. The amendment would also require the agency to resolve discrimination complaints within 90 days.

The measure now heads for the House Energy and Commerce Committee, which is expected to vote on it within the next several weeks.

Offering the potential for a new surprise for cable, Rep. Joe Barton, R-Texas, the chairman of the committee, said last week that he would consider amending the bill to include a provision that would regulate indecency on cable.

Under current law, only broadcasters-not cable and satellite TV operators-are subject to FCC indecency prohibitions.

The beefed-up enforcement provisions were not sufficient to win the support of all subcommittee Democrats. Voting against the measure were Reps. John Dingell, D-Mich.; Ed Markey, D-Mass.; Mike Doyle, D-Pa.; and Anna Eshoo, D-Calif.