FCC to Probe Video Franchising Hurdles

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Washington— The Federal Communications Commission is planning to launch a rulemaking procedure this week that could speed the entry of telephone companies such as SBC Communications Inc. and Verizon Communications Inc. into video markets.

The FCC is planning to examine a provision of the 1992 Cable Act, known as section 621, which bars local governments from acting unreasonably in awarding franchises to companies that want to compete with incumbent cable providers, according to the agenda for the commission’s Nov. 3 meeting, which was released Thursday night.

SBC and Verizon are lobbying state and federal officials to relax or eliminate local franchising requirements, claiming the process is long and delays potential wireline competitors from entry.

In a speech last Wednesday, FCC chairman Kevin Martin confirmed he wanted to explore the agency’s legal options in dealing with local governments accused of holding up phone company entry into the supply of video-programming services in communities across the country.

Martin’s maneuvers to some extent mirror efforts on Capitol Hill, where Sen. John Ensign (R-Nev.) is pushing sweeping telecommunications-reform legislation that would end local franchising.

Ensign said last Tuesday that passage of his bill, S. 1504, would cause cable incumbents facing competition from telcos to slash their rates across the country. He claimed that Charter Communications Inc. cut its rates by 50% in Keller, Texas, when Verizon Communications Inc. began to provide video service a few months ago.

“I think this would happen all across the United States because, guess what, competition leads to better services at lower prices,” Ensign told the Heritage Foundation, a conservative think tank. “There is no question that if my bill was enacted, that’s exactly what we would see.”

Contrary to Ensign’s suggestion, Charter did not cut rates 50% for all Keller customers. Instead, the company launched a promotion many months before Verizon’s arrival, Charter spokesman David Andersen said (see Access, page 19).

He said that under the plan, new subscribers received a 240-channel digital package and high-speed Internet access for $50 per month for the first 12 months. The digital package normally costs $68.99 per month.

National Cable & Telecommunications Association spokesman Brian Dietz said cable operators did not expect phone company rivals to dramatically revamp rate structures.

Ensign said he did not expect his bill to become law this year, adding that he had no plan to try to pass a streamlined bill that included just the cable-franchising provisions.

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