Verizon Hopes Rising in Texas

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Verizon Communications Inc.'s cable-franchise reform hopes are on the rise again in the Lone Star State.

Texas Gov. Rick Perry signed a proclamation July 12 that called the 79th session of the Legislature back into session, specifically to consider a bill to provide broadband over power lines and a proposal for state authority over cable and video services.

By the end of the next day (July 13), the state Senate's Business and Commerce Committee had approved a bill giving the state Public Utilities Commission authority to issue statewide franchises, the telco's chief goal this session.

Full Senate and state House of Representatives approval is still needed.

Previously, a broad-based telecommunications reform bill, including similar statewide franchise terms, failed during the regular session, when time ran out for its passage.

The Texas Cable & Telecommunications Association renewed its campaign against the telecommunications-reform bill, which also would deregulate voice services. The TCTA criticized Texas-based telcos, including SBC Communications Inc., for seeking “special favors” from the state legislature.

The five franchises Verizon has picked in the state demonstrate that multibillion-dollar companies don't need favors or incentives through legislation to invest in Texas, the cable-trade group contends.

Verizon officials say they need relief from city-by-city franchise negotiations in order to quickly bring competitive services to market.

SBC maintains it needs no franchises for its planned Internet protocol-based video service.

“We urge the legislature to study this highly complex issue further before rushing through legislation in a special session that is likely to have a major negative impact on cities and Texas consumers,” TCTA chairman Tom Kinney, the president of Time Warner Cable Austin, said in a statement last week.

Here are some elements of the Senate bill:

  • After Sept. 1, applicants could seek state-issued certificates of franchise authority, but cable incumbents are bound to their municipal franchises through their current terms. Incumbents also can't drop institutional-network operations or sever free connections to schools or municipal buildings.
  • Statewide applicants must still comply with local rights-of-way rules, and must pay 5% of gross revenues to cities and counties.
  • When an incumbent's local franchise expires, municipalities must negotiate with the statewide franchise holder over the amount of cash or in-kind support for public, educational and government channels.
  • Statewide providers must match the number of PEG channels activated by the local incumbent. If none exist in a market now, the statewide certificate holder will be required to make available three channels for PEG programming in towns of 50,000 or more residents, or two channels in smaller municipalities.
  • There are no mandatory buildout provisions and cities can't make demands for things like a local office.
  • Economic redlining is prohibited.

The Texas cable group blasted the Senate committee action, asserting that phone rates would rise under the telecom portion of the bill, and the cable portion represents a “stunning effort to give aid where none is needed,” according to Kinney. The bill would allow “multibillion dollar corporations to redline and divide communities in the delivery of vital cable and Internet service,” he said in the statement.

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