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McCain Readying Incentive Plan to Boost a la Carte

May 26, 2006  •  Post A Comment

Sen. John McCain is set to introduce legislation that would reward video service providers that offer cable channels on an a la carte basis with the right to obtain a national video franchise and pay lower fees to municipalities.

Sen. McCain, R-Ariz., was originally expected to introduce the legislation Thursday, but might have gotten sidetracked by the Senate’s passage of a major immigration reform bill. A number of industry observers said Sen. McCain was expected to introduce the legislation, called the Choice Act, on Friday, but as of Friday afternoon had not yet done so.

The Choice Act makes good on a promise by Sen. McCain to introduce a la carte legislation this month, and comes at a time when lawmakers, consumers and regulators are growing increasingly concerned with rising cable bills. The cable industry opposes the bill, arguing that it would drive up cable prices and that the legislation amounts to government tinkering in something that should be controlled by the marketplace.

Sen. McCain’s bill specifically says that in exchange for offering consumers the ability to pick and choose specific cable channels, video service providers would receive the right to obtain a national video franchise. The rule applies to cable and phone companies, which require public rights of way to provide TV services. Satellite companies, which don’t need access to public rights of way to offer service, are not covered by the act.

Video providers are currently required to obtain approvals from each community where they want to offer video services, though a number of states, including Texas, are beginning to allow video providers to seek statewide approvals.

The bill also enables video providers to pay lower fees to local communities as part of franchise agreements and would eliminate local municipalities’ ability to demand in-kind donations as a condition for granting a video franchise.