News

FCC Sets Franchise Order

3/09/2007 7:00 PM Eastern

Washington— The Federal Communications Commission last Monday released a previously adopted order that gives local governments 90 days to reject or approve cable-service licenses sought by phone companies that already have facilities within city-controlled rights of way.

The FCC’s decision to impose a deadline was designed to provide a degree of certainty to AT&T and Verizon Communications, as the two largest phone companies put billions of investment dollars at risk in an effort to break into local video markets with a comparable voice, video and data bundle.

“Verizon spends more on capital investment than any other American company. It would be difficult to invest so much into broadband and video deployment without common-sense decisions like this one,” Verizon Telecom chief marketing officer Marilyn O’Connell said in a prepared statement.

Verizon, for example, intends to spend $23 billion — about $1,300 per home passed — to make its high-capacity fiber-optic network available to 18 million households over the next three years.

FCC chairman Kevin Martin is supporting Verizon and AT&T’s video entry efforts, saying cable incumbents need more competition from wireline service providers.

Local governments are expected to appeal, insisting that the FCC lacks legal authority to impose time constraints on franchising authorities.

A coalition of local regulatory officials and agencies denounced the commission’s ruling, saying it “will bring great harm to local governments across the country by undermining their authority to act to protect the taxpaying public, their public rights of way and their public safety.”

The cable industry hasn’t committed to go to court.

“We are still reviewing it,” National Cable & Telecommunications Association vice president of communications Brian Dietz said.

After the expiration of the 90-day period without a ruling by the franchising authority, a franchise applicant would have interim authorization to provide cable service.

It’s unclear whether such a circumstance would arise on a regular basis because franchising authorities could simply deny the application within 90 days, restarting the clock.

Although the FCC adopted the rules in late December, it needed 75 days to release the 68-page order, which attempts to justify its conclusion that, in many instances, franchise negotiations are taking too long and frustrating competition.