Cities: Telco Entry Still Slow

Legislation shifting authority for video franchising to state governments now exists in 21 states. But those laws — promoted to hasten cable competitors' market entry — have not accelerated deployment or lowered prices, according to TeleCommUnity, an alliance of local governments promoting their role in franchising.

Gerry Lederer, an attorney for Washington, D.C., law firm Miller & Van Eaton, which advises cities, said in a June 29 telephone briefing with reporters that Verizon Communications has earned 810 franchises over the past two years. That counters arguments that local negotiations are a barrier to entry without state legislation, Lederer added.

Despite the passage of bills designed to speed competition in states where AT&T is the primary provider, that company has failed to launch its U-verse TV service in half of the states where it has received relief from local franchising rules, Lederer said.

What the drive for state franchising has really been all about, he asserted, is “not serving two-thirds of households” in those states. Lack of buildout requirements will allow competitors to move only into those neighborhoods that will be most profitable to them — and into just enough low-income communities to satisfy some state laws — local officials asserted.

In Lederer's judgment, language in the bills has improved as more states take up the issue. For instance, the Ohio and Illinois bills prevent competitors from meeting deployment obligations with old technology like direct-broadcast satellite services in place of fiber-to-the-home or Internet-protocol TV services, he said. More bills are specifying customer-service standards and designating which officials must oversee enforcement, he added.

Negotiators “stumbled” on bills in Kansas, Indiana and North and South Carolina when defining “gross revenues,” he said. Definitions there require that franchise fees be paid on “all revenue generated by a subscriber” — a definition that represents only 70% of an operator's revenue, as it does not tax advertising earnings or launch fees, among other things. Bills passed this year — except in Nevada — defined gross revenues more broadly, generating more funds for cities and states.