News

Tennessee Bill Would Broaden Broadband

4/11/2008 8:00 PM Eastern

Tennessee legislators have been presented a new version of a state franchising bill with a unique scheme intended to incent new providers to extend broadband services.

The bill’s terminology, which has been the subject of negotiations among the affected industries, contains broad buildout language.

Large telephone companies that become video providers must deliver that service to 30% of their existing service area within three and a half years. But those companies can decrease the required video footprint if they deploy broadband services to areas that don’t currently have such services, or areas that are determined to be underserved.

Under the formula in the bill, a provider would get credit on a 4-to-1 basis for connecting a home to broadband services for the first time. That means, a house wired for broadband for the first time would count as four homes when computing the 30% buildout formula.

According to the current version of the bill, local governments may also subsidize broadband deployment, if the Tennessee Regulatory Authority determines that there is no interest in the private sector to build plant locally.

This is the second time Tennessee has taken up the issue of state franchising. The 2007 proposal was withdrawn by its sponsors due to heavy opposition from a coalition formed between cable operators and local governments. This time, however, lawmakers drew cable and telephone forces together for negotiations on a bill before proposing a draft.

“The cable industry, including Comcast and Charter [Communications], stood firm to make make sure that our members were treated fairly and that AT&T and other companies were not granted advantages in the law,” said Tennessee Cable Telecommunications Association executive director Stacey Briggs. AT&T is the most vocal backer of the bill.

Under the current draft, incumbent cable providers can opt to continue under their local agreements or to file for state authority.

The bill assigns franchising authority to the TRA, which would approve 10-year pacts. That agency would also have the power to order credits from providers, in response to complaints from consumers. Local governments retain authority over the local rights-of-way, and will receive 5% of gross revenues as franchise fee payments from all providers.

The state franchising bill must go through multiple committees before it can be subject of a House floor vote.

November