02.20.2006 02:01 PM
Cable vs. telecoms in congressional franchise fight

Cable and telecom executives brought their fight before the Senate Commerce Committee last week in a showdown over television franchise rights in local communities.

Ivan Seidenberg, CEO of Verizon Communications, and Ed Whitacre, his counterpart at AT&T, urged senators to pass legislation that would allow phone companies to bypass local communities so they can roll out service more quickly.

On the other side, Cablevision CEO Tom Rutledge argued that taking control away from local authorities to grant franchise agreements would be a mistake.

Verizon and AT&T are spending billions of dollars to upgrade their networks to deliver high-speed Internet access and on-demand television services. However, Seidenberg said, the process has been slowed due to negotiations over franchise agreements.

Rutledge said they are working to “play by the existing rules” and obtain franchises on the local level. “However, as we multiply these efforts across the country, this process, quite simply, takes too long, is too expensive and ultimately is too big an impediment to investment and competition.”

Verizon has already reached more than 3 million homes with its fiber network in 18 states. However, it has only begun offering TV service in just a few communities in six states: Texas, New York, California, Massachusetts, Florida and Virginia, CNET News reported. However, in places where Verizon’s Fios television service is offered, many customers have abandoned their cable providers, Seidenberg said.

Even those who don’t choose FiOS TV are still benefiting, because cable operators have cut prices between 28 percent and 42 percent to compete, the Verizon executive said.

The cable industry argued that changing the laws to allow blanket franchises gives telephone companies an unfair advantage because they have spent years negotiating contracts with each individual town or city. Verizon and AT&T are simply trying to skirt the process, Rutledge testified.

Two members of the Commerce Committee, Conrad Burns (R-MT) and co-chairman Daniel Inouye (D-HI), have already voiced their support for streamlining the video franchise process. But the senators have said the laws can be changed only if cable is put on the same footing as new phone company entrants. They also said state and local governments should not be stripped of their authority.

Most likely the battle over video franchising will be decided in statehouses as opposed to on Capitol Hill. Last year, Texas became the first state to pass a law granting statewide video franchises. Similar legislation is now being considered in Virginia, Indiana, Kansas, Missouri, South Carolina and New Jersey.

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