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Cable and Broadcast Oppose House Telecom Draft

Every once in a while, broadcasters and cable operators end up on the same side, as they have on the latest telecom bill circulating in the House of Representatives. Both factions opposed the draft bill's provisions allowing telcos to sail into the video business under rules the cable industry can only dream about.

The 70-page discussion draft on Internet and broadband regulation would let telcos forego the type of local video franchise agreements that cable operators have bemoaned since they started stringing wires. Telcos would simply have to register with the FCC to enter a market. The draft also leaves must-carry, retransmission and other video provider rules up to the FCC, which can be petitioned to issue waivers. For cable, must-carry and retrans are the stuff of Congressional edict, and can only be waived by Congressionally wielded writing instruments.

At a House Telecom Subcommittee hearing on the draft, Jim Yager, CEO of Barrington Broadcasting, said telcoTV should play by the same rules as cable.

"Absent retransmission consent, a video distributor would simply take a broadcaster's signal and profit from it," he testified. "Meanwhile, the government would set the rate by which the broadcaster is compensated, and the station would never even have the opportunity to negotiate its carriage terms."

The draft calls for the FCC to review the telcoTV rules every four years, and "eliminate any regulations ... to the extent that the commission determines that such regulations are no longer necessary as the result of meaningful economic competition."

"Why do laws like must-carry, that Congress enacted in 1992, that have been reaffirmed not once, but twice by the Supreme Court... suddenly need to be defended every four years?" Yager said.

Representing cable at the hearing, Mike Willner, president and CEO of Insight Communications, also said telcoTV should play by the same rules as cable. Willner specifically criticized the way the bill addressed video, data, voice and the combination of all three differently, and how it singled out Internet Protocol video technology for regulation.

"A technology-based approach creates a perverse incentive for providers to select the technologies they use based on a particular regulatory result, even if they do not necessarily respond to consumer demand most effectively and efficiently, and it may lock them into particular technologies long after those technologies have outlived their usefulness," Willner said.

Fred Upton (R-Mich.) chairman of the subcommittee, said completing the telecom bill was one of his highest priorities, and that he intended to work with Joe Barton (R-Texas) chairman of the House Commerce Committee, to move it. The Democrats in the room begged to differ. Barton and Upton were the chief architects of the current draft, unlike the original version released in September, which included input from Democrats. Ed Markey (D-Mass.) said the latest draft represented a "significant step backward."

The majority of the 15 witnesses at the hearing were underwhelmed by both drafts. When asked by Barton which bill they preferred, most said neither.