Rutledge Backs Franchising Status Quo

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Washington -- Defending the franchising status quo before a Senate committee, Cablevision Systems Corp. chief operating officer Tom Rutledge accused AT&T Inc. and Verizon Communications Inc. of preferring to carp about well-established rules instead of getting on with building video facilities.

“The only thing slowing down Verizon is Verizon. And the only thing slowing down AT&T is AT&T,” Rutledge Wednesday told the Senate Commerce Committee, a panel considering reforms favorable to AT&T and Verizon but with appropriate consumer safeguards.

“I believe the franchising process needs to be looked at, needs to be streamlined,” said Sen. Ben Nelson (D-Neb.), a moderate making a point supported by several committee senators from both parties.

Cable companies want AT&T and Verizon to shoulder the same regulatory burdens, especially the requirement to provide service throughout a community in order to prevent discrimination against low-income groups.

“New providers shouldn’t be able to cherry-pick -- pick off the wealthiest consumers and forget about the rest,” said Sen. Frank Lautenberg (D-N.J.), taking cable's side on that aspect of the debate.

The phone giants insisted that the need to sign contracts with thousands of local governments as mandated by current law frustrates consumer choice and contributes to rising nominal cable rates. AT&T and Verizon are investing billions of dollars to match cable’s voice, video and data bundle that is proving such a potent weapon against phone and satellite-TV companies.

“The time for a national, streamlined franchising process is now because the era of broadband video is here,” said Verizon CEO Ivan Seidenberg, who accused cable of “sending their lawyers to impose on Verizon a laundry list of onerous obligations.”

The franchising ruckus prompted Sen. John McCain (R-Ariz.) to begin work on a bill that would eliminate local entry barriers if providers offered a menu of a la carte programming in conjunction with traditional programming packages. AT&T has promised a la carte offerings if allowed to by content vendors.

“I don’t see why a retired person in Sun City, Ariz., should have to pay an exorbitant fee to watch ESPN,” said McCain, adding that his bill would emerge “soon.”

Commerce Committee chairman Ted Stevens (R-Alaska) wants to vote on a bill in March. Sen. Jay Rockefeller (D-W. Va.) said he thinks legislation has a chance because he and other lawmakers want companies to spend billions of dollars to deploy broadband facilities in rural states if provided the right incentives.

“We have hearings, people get worked up and then nothing happens,” Rockefeller said of most legislative efforts. “It can’t be one of those years on this subject because I think the stars are aligned.”

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