Tuesday, March 6, 2007

FCC Rules on Video Franchising

The U.S. FCC found that the current operation of the local video franchising process in many jurisdictions impedes cable competition and accelerated broadband deployment. Local video franchising has been raised as an issue by AT&T and Verizon in their efforts to deploy IPTV networks. These companies have to acquire a video franchise from each local government that they plan to serve. This requires thousand of separate agreements, which is an expensive and time consuming process.

The FCC addressed drawn-out local negotiations with no time limits, unreasonable build-out requirements, unreasonable requests for “in-kind” payments that attempt to subvert the five percent cap on franchise fees, and unreasonable demands with respect to public, educational and government access (or “PEG”).

The full text of this ruling can be found at http://www.fcc.gov/

It is interesting that the FCC did not fundamentally change this local video regulatory system. It made adjustments that reduce the flexibility available to the local authorities. This all seems quite reasonable. The only real issue that we have is that it reduces the ability of the local authorities to get certain benefits such as providing service to schools and libraries that can provide significant public good.

What this ruling did not do is move this regulatory authority to the states or to the Federal government. A number of states such as Texas and California have already moved this authority to the state level.

While this will help AT&T and Verizon, it still forces them to slog through the video franchise process one local authority at a time. Verizon had accepted this requirement and has been working through it. AT&T has been fighting against it and will have to comply.

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