Policy

Franchise Bill Finds Foes

3/17/2006 7:06 PM Eastern

Washington— Republican leaders of the House Energy and Commerce Committee are trying to build political support for a bill opposed by cable that would award national video franchises to phone companies.

But lawmakers interviewed about the bill said they were not convinced that handicapping cable in an effort to expedite phone-company entry into cable markets was the right approach.

Rep. Marsha Blackburn (R-Tenn.) said she was troubled by a provision that would require an incumbent cable operator to offer uniform prices throughout a franchise area. The provision is designed to stop cable companies from using deep discounts to prevent a phone company from building a subscriber base.

'UNIFORMITY ISSUES’

“Some of the other things we’re hearing in the bill we have concerns about. Uniformity issues,” Blackburn said. “We’re working through that.”

Another provision would deny cable relief from local-franchising obligations until a phone company had 15% of the local pay TV market.

Two weeks ago, House Energy and Commerce Committee chairman Joe Barton (R-Texas) and Telecommunications and the Internet Subcommittee chairman Fred Upton (R-Mich.) reached a tentative deal with committee Democrats.

But no bill has been introduced and no hearings or committee votes have been scheduled, mainly because Barton and Upton used last week to sell the compromise to committee Republicans, who have been fielding cable’s complaints about the Barton-Upton approach.

House Energy and Commerce deputy communications director Terry Lane said last Friday that no committee action has been scheduled for the week of March 27. The House won’t be in session this week.

Concern that the bill would lack balance was bipartisan.

Rep. Rick Boucher (D-Va.), who sponsored legislation in the early 1990s to remove the ban on phone-company entry into cable, stressed the need for parity.

“What we do for telephone companies we need to do in equal measure for cable,” he said. “If there are differences between how the two are treated, I will argue to eliminate the differences.”

Cable is using its clout to put pressure on Barton and Upton to strike a better balance. In the weeks ahead, cable will learn whether its opposition can derail the bill. “They’re certainly a very large and important industry. They have influence. Whether it is influence sufficient to stop the bill I really don’t know,” Boucher said.

Two weeks ago, National Cable & Telecommunications Association president Kyle McSlarrow called the House effort a “sweetheart deal” for AT&T Inc. and Verizon Communications Inc.

Asked if he knew that cable was troubled by the bill, Barton said last Wednesday, “I am aware of that. Is that a news flash?”

Barton said he hoped cable came around to his view that the bill would prove to be in the industry’s long-term interest. “Cable, like any other red-blooded American industry that has been successful, has a situation that they are very comfortable with. They would rather maintain the status quo,” he said, adding, “although I really believe over time, if what we are talking about becomes law, they’ll be very comfortable with that and do very well.”

The bill first would likely need the approval of Upton’s subcommittee.

“We’re working with cable to see whether we can get them on board. We’ll see what happens,” Upton said.

NEUTRALITY ISSUE

Another issue is network neutrality — a policy banning broadband-access providers from discriminating against Web-based rivals that offer voice, video and content services. Discrimination can include blocking or degrading Internet traffic.

Some in Congress would ban a cable company from creating an Internet “fast lane” that would include service providers that had paid cable.

Cable has argued that network-neutrality mandates are unnecessary because the Internet-access market is competitive and devoid of discriminatory conduct.

Barton indicated that he would include a network-neutrality provision to produce a bipartisan bill. “I think that if we can reach an agreement, it would be a positive addition to the bill,” he said.

McSlarrow has complained that net neutrality would represent regulation of the Internet for the first time.

Rep. Chip Pickering (R-Miss.), who is helping Barton and Upton draft the bill and round up support, said net neutrality rules were in keeping with the GOP’s free-market philosophy.

“Net neutrality was affirmed by [FCC] chairman [Michael] Powell, a Republican chairman, and pro-competitive requirements are actually very much consistent with the free-market ideals of Ronald Reagan, who broke up AT&T,” Pickering said.

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