Phone Firms Prevail in Indiana Franchise Push
By Linda Haugsted -- Multichannel News, 3/5/2006 7:00:00 PM
Indiana should become the second state to adopt telephone company-backed franchising reform, as Republican Gov. Mitch Daniels is expected to sign a bill the state general assembly passed on Feb. 28, approving statewide video franchises.
The telecommunications deregulation bill — approved by a final vote of 78-18 — would give the Indiana Utility Regulatory Commission oversight of cable operators.
But there’s an interesting wrinkle in the proposal. Unlike similar bills promoted in other states, Indiana’s pending law would let incumbent providers opt out of their local agreements after July 1.
| Status Report |
|---|
| Where the states stand: |
| Source: MCN research. |
| In Kansas, Missouri, New Jersey and South Carolina, legislatures are looking at statewide video franchises. In California, affected industries are working on the issue, but no bills have been introduced yet. |
| In Indiana, a new law enacting statewide franchising is pending the governor’s signature. |
| In Texas, statewide franchising has been enacted into law. |
| In Virginia, a new law retains local franchising powers. |
INSTITUTIONAL AID
The bill also specifies that incumbent operators, whether regulated by states or localities, must continue their institutional network support until their franchises elapse or until January 2009, whichever term is longer.
Tim Oakes, executive director and general counsel of the Indiana Cable Telecommunications Association, said his members were disappointed. “We believe it to be the wrong course,” he said of the legislation.
Because members have until July to act on the opt-out provision, operators plan to use the next few months to further examine the bill and determine which course of action makes business sense, Oakes said.
Incumbents in Indiana include Comcast Corp., Bright House Networks, Mediacom Communications Corp. and Charter Communications Inc.
AT&T Inc. is the biggest local phone provider.
During debate over the bill, the Digital Policy Institute at Ball State University released a report which said cable competition could prompt rates to fall as much as 30%.
AT&T applauded the legislation, calling it a “compelling legislative model for promoting competition.”
Indiana utility regulators are specifically prohibited from imposing build-out requirements on new providers. Providers must still pay franchise fees equal to what incumbents pay, and the IURC can’t create any new fees for new providers.
New providers are to be certified to operate within 30 days after applying.
New providers must match the public, educational and government obligations provided by incumbent operators, until local agreements expire.
CHANGES IN VIRGINIA
Virginia legislators also approved video franchising changes, but did not attempt to institute statewide authorization. It has not yet been signed into law by Gov. Tim Kaine, a Democrat.
The Virginia constitution guarantees local governments the right to franchise local services. For that reason, reform legislation backed by Verizon Communications focused on shrinking the local negotiation period.
Local governments, under the new law, will have no longer than 75 days to negotiate a franchise.
Lobbyists for Virginia’s cable operators had sought to impose full buildout requirements on new video entrants, but could not convince legislators to do so.
Verizon, though, would be required to live up to buildout requirements included in local franchise agreements negotiated before the bill was approved. Those franchises are in the city and county of Henrico, in Falls Church and in Herndon.
Ray LaMura, president of the Virginia Cable Telecommunications Association, said incumbents only want equitable treatment. “With a level playing field, cable is willing to roll up their sleeves and duke it our over customer service,” he said.
National Cable & Telecommunications Association CEO Kyle McSlarrow called the Virginia changes “a step in the right direction.”
“While it’s not perfect, we’re pleased the legislation recognizes the importance of localism, treats all providers fairly by maintaining a level playing field and facilitates speedy competitive entry in a way that benefits communities, service providers and all those we serve,” McSlarrow said in a statement.
No party got everything it wanted, said Robert Woltz Jr., the Verizon Virginia president. The company will detail its deployment plans later, he added in a statement.
The Virginia law would take effect July 1.
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