House Panel Leaders OK National Cable Franchise
By Ted Hearn -- Multichannel News, 3/9/2006 2:06:00 PM
In a setback for cable, key House lawmakers Wednesday night agreed in principle to award a national cable franchise to phone companies and to subject cable operators to continued local franchising requirements until phone rivals have reached 15% local-video-market penetration, industry and Capitol Hill aides said Thursday morning.
The agreement was reached by House Energy and Commerce Committee chairman Joe Barton (R-Texas), Telecommunications and the Internet Subcommittee chairman Fred Upton (R-Mich.) and Reps. Chip Pickering (R-Miss.), John Dingell (D-Mich.) and Edward Markey (D-Mass.), the sources said.
AT&T Inc. and Verizon Communications Inc. have been urging Congress to adopt a national-franchise policy, but the agreement includes provisions that have not been publicly debated.
Senate Commerce Committee chairman Ted Stevens (R-Alaska) is expected to unveil a bill soon that is expected to include cable-franchising relief for the large phone companies.
Under the House agreement, one provision would withhold regulatory relief from cable until the phone company had secured 15% of local video market. Under current law, cable operators are price-deregulated on the basic tier when pay TV competitors are serving more than 15% of local households.
Sources familiar with the agreement stressed that legislative language had not been crafted and that many details had not been worked out. Capitol Hill sources could not elaborate on the 15% test, including whether it meant 15% of local households, 15% of local TV households or 15% of local pay TV households.
A second provision would protect phone companies from predatory pricing tactics by cable incumbents. As explained by sources, if the cable company cut its rates to meet or beat phone-company video prices, the cable company would be required to make the price cuts available to its entire local subscriber base, not just those homes served or capable of being served by the local phone company.
Under current law, regulated cable operators are required to offer a uniform rate structure in a local market. This requirement is eliminated when competitors have met the 15% penetration test.
The House agreement came three days after AT&T announced its $67 billion takeover of BellSouth Corp. -- a massive deal that some predicted would hurt AT&T’s and Verizon’s chances of obtaining a favorable cable-franchising law from Congress.
National Cable & Telecommunications Association spokesman Brian Dietz declined to comment because the cable trade group had not reviewed legislative language.
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