Tuesday, December 12, 2006

Local Telecommunications Issues Highlighted at the FCC

The US Federal Communications Commission may vote on Dec. 20 to change some of the rules regarding cable franchising. FCC chairman Kevin Martin has circulated a proposal to the other four commissioners to require local authorities to decide within 90 days on some phone-company applications to offer TV in competition with cable providers. The plan would require local authorities to rule within 90 days on video-franchise applications from companies that already have a community's rights-of-way. Localities would have 180 days to rule on applications from companies that don't already have such access. Martin also called for limits on the types of fees local agencies can "reasonably require" new TV providers to pay in franchise deals. The FCC also may limit local regulators' ability to impose "build-out" rules, which typically require a company selling TV in a cable market to offer service to all households in that region.

Unrelated to the FCC Dec. 20 vote, on Nov. 13 and 14 Comcast filed effective competition petitions with the FCC for selected communities in seven states. Under federal law, if a cable provider can demonstrate that effective competition exists in a community, it can apply to the FCC for relief from regulation of basic cable rates and for associated equipment and installation. These filings affect 831,344 customers nationally. Already more than a million of all Comcast customers have been certified by the FCC as being subject to effective competition. These filings demonstrate the increasing and aggressive competition present in the multichannel video marketplace. Congress and the FCC set up a process allowing cable companies to petition for regulatory relief when effective competition is demonstrated. Federal law recognizes that where certain competitive conditions exist in a marketplace, regulation of basic cable programming and equipment and installation rates is no longer necessary. These filings are customary when effective competition can be demonstrated. Comcast has filed and previously been granted numerous applications for effective competition. When effective competition exists, consumer protection is ensured by market forces, rather than rate regulation. If approved by the FCC, Comcast would still be subject to other requirements of its local franchise agreements including the payment of franchise fees and carriage of public, educational and government access channels, strict customer and technical service standards, and requirements to serve every neighborhood.

While both issues deal with telecommunications, it is important to understand that they are in no way related. While the first issue may have significant ramifications on local franchising, the ladder issue will not impact a municipalities ability to govern the franchise arrangement with Comcast within their operating area. The first issue, which deals with the FCC rule change, is problematic, but there are several national groups working to preempt any action taken by the FCC, arguing that it will take congressional action to impose “build-out” and other franchising rules.

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