News

FCC: 90-Day Franchise Shot Clock

12/20/2006 8:45 AM Eastern

Local governments will have 90 days to act on cable-franchise applications filed by AT&T, Verizon Communications and other entities with existing rights to access city-owned conduits, the Federal Communications Commission ruled Wednesday in an action that split the agency along partisan lines.

With support from major phone firms, FCC chairman Kevin Martin championed franchise reform as his proclaimed antidote for rising nominal cable rates and for spurring deployment of high-speed Internet-access facilities across the country.

AT&T senior vice president of federal relations Bob Quinn said, “The FCC has wisely determined that the pace of video competition and broadband deployment should not be held hostage to the administration of a franchising process created for monopoly cable providers.”

Because cable incumbents were not granted similar 90-day guarantees, the National Cable & Telecommunications Association called the FCC vote a rejection of a “level playing field” among cable providers. Needing more time to evaluate the FCC’s order in full, NCTA president Kyle McSlarrow declined to promise that the trade group would take the agency to court.

“We have not made a decision. All we got today was a sketch,” McSlarrow said.

While fellow Republicans Deborah Taylor Tate and Robert McDowell backed Martin, Democrats Michael Copps and Jonathan Adelstein refused to go along, claiming that the commission was on shaky legal ground in thinking that it could boss thousands of cities and towns on how to charter new cable entrants.

The FCC’s ruling also included mandates related to the calculation of cable-franchise fees, network-buildout requirements, contribution of public-access channels and local oversight of noncable services, such as high-speed data and voice-over-Internet-protocol phone service.

More than anything else, Martin wanted to ensure that large phone companies could get cities to act promptly.

If no franchise is granted within 90 days, AT&T, for example, could provide cable service under an “interim authorization,” according to Rosemary Harold, deputy chief of the FCC’s Media Bureau. If the city were to reject the application later, AT&T’s interim authorization would sunset and the company would have to take the city to court, she added.

McSlarrow called the process “awkward” because a city could reject the application on “day 89” in order to move the process to court immediately and without triggering the interim authorization.

“It doesn’t necessarily encourage good-faith bargaining,” he added.

The new franchise rules are expected to take legal effect early next year. For the 90-day shot clock to toll, the applicant must make “a filing of some sort in writing,” Harold said.

Martin -- saying that cable rates had risen more than 90% in the past decade -- asserted that competition was “desperately needed” in local cable markets and that only the presence of a second cable company had caused the rates of the cable incumbent to decline, in some cases by as much as 17%.

Along with Copps, Adelstein insisted that the FCC was intervening based on little evidence that local governments had unreasonably refused to award competing cable franchises.

At one point, Adelstein mocked Martin’s plan as “faith-based rulemaking,” promising that it would “offend many in Congress” and likely face “rejection by the courts.”

Martin, however, did cite a few cases where cities had evidently sought unrelated and unreasonable in-kind contributions from would-be cable-service providers.

McDowell came to Martin’s defense by arguing that the FCC was “on safe legal ground” in attempting to check the excesses of local governments in cable negotiations.

According to McDowell, Martin promised to issue an order in about six months on whether cable incumbents should be entitled to the 90-day shot clock when seeking franchise renewals. The agency has tentatively concluded that they should be.

“No one can say how that’s going to turn out,” said McSlarrow, who has been putting heat on the Martin FCC for failing to meet deadlines established by Congress.