Stevens Modifies Telecom Bill

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Phone companies could enter cable markets within 90 days under streamlined franchising rules and cable incumbents could opt in to the new licensing regime when existing agreements expire or when phone companies arrive in the market, according to new telecommunications draft legislation from Senate Commerce Committee chairman Ted Stevens (R-Alaska) obtained by Multichannel News.

On network neutrality, the new 151-page bill is no different from the original (S. 2686) released May 1. It would require the Federal Communications Commission to study the Internet market and file annual reports to Congress over a five-year period.

Stevens is holding a hearing Tuesday on his Communications, Consumer's Choice and Broadband Deployment Act of 2006. He hopes to vote it out of committee June 20 despite strong opposition by Sen. Daniel Inouye (Hawaii) -- the panel's top Democrat -- to the net-neutrality language.

Last Thursday, the House approved a cable-franchise bill that would let phone companies enter new markets within 30 days and that vests the FCC with authority to police discriminatory conduct by broadband-access providers. But net-neutrality proponents consider the House bill insufficient.

With regard to cable franchising, Stevens altered his position some in response to concerns by local officials. His original bill would have allowed AT&T Inc. and Verizon Communications Inc. to begin offering video service within 30 days.

Local governments won another change: Stevens modified his bill so that a video provider using the new franchising process would have to pay franchise fees based on a definition of gross revenue that includes commissions paid by home shopping channels. Cities argued that the original bill would have cut franchise fees by up to 20%.

While Stevens would not impose video-buildout requirements on phone companies, he would expose them to penalities for denial of service based on a group's income, race or religion. But phone companies could cite commercial infeasibility to defend against red-lining charges.

Under the Stevens bill, local governments would be required to use a simplified franchising procedure crafted by the FCC, in a concession to phone-company concerns that current local franchising system is long, tedious and a barrier to competition.

On program access, the Stevens bill would immediately close the so-called terrestrial loophole, which allows cable operators to withhold terrestrially delivered affiliated program from competing pay TV distributors. That provision is aimed at forcing Comcast Corp. to sell Comcast SportsNet Philadelphia to competitors.

Stevens would also allow satellite carriers to file FCC complaints to gain access to regional sports programming not owned by cable operators but distributed exclusively by undefined "dominant" cable operators. But in a change made to the first Stevens bill, cable operators could not demand access to NFL Sunday Ticket, the National Football League's out-of-market package, to which DirecTV Inc. has exclusive rights.

On carriage of digital-TV stations, the draft bill was unchanged in requiring high-capacity cable operators, until Feb. 17, 2014, to ensure that the digital-TV signals of stations electing must-carry can be viewed on analog- and digital-TV sets. Signal downcoversion from digital to analog and from HD to standard definition is permitted at the cable headend.

Stevens added similar downconversion authority for satellite carriers DirecTV and EchoStar Communications Corp.

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