Martin Wants to Revise Franchise Rules

FCC Chairman Kevin Martin this week proposed changes to the way franchise rules are imposed on telcos seeking to enter the video business. Specifically, the chairman wants to limit the time local municipalities can sit on telco video franchise applications to 90 days for those already with the community rights of way;
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FCC Chairman Kevin Martin this week proposed changes to the way franchise rules are imposed on telcos seeking to enter the video business.

Specifically, the chairman wants to limit the time local municipalities can sit on telco video franchise applications to 90 days for those already with the community rights of way; limit a local franchise authority's fee requirements and streamline build-out requirements that can lead to "unreasonable barriers to entry."

In a speech to a telecommunications gathering in Washington, the chairman based his argument on increasing broadband penetration and promoting competition--particularly against cable.

"Competition is desperately needed in the video market," Martin said, citing FCC statistics that show cable rates increasing 93 percent from 1995-2005. In areas where cable operators faced competition from a second cable provider, monthly cable fees were approximately 17 percent lower than in areas without a second cable provider (statistics on competition from DBS showed no difference in fees, according to Martin).

"The FCC's data indicates that only competition from a second cable operator has a downward impact on prices," the chairman said.

Martin said that telcos now offering video services have the dual potential to increase broadband penetration as well as video competition. With the collapse of the local and long-distance phone market, telcos need revenues from video services to stay afloat and keep those broadband pipes humming.

"The ability to deploy broadband networks rapidly and the ability to offer video to consumers are linked intrinsically," he said. The telcos' entry into the video marketplace "has the potential to advance both the goals of broadband deployment and video competition."

Currently, telcos--including Verizon and AT&T, the two largest operators deploying video services--have to negotiate a hodgepodge of franchise rules nationwide. Some states, including California, New York, New Jersey and Texas are looking at changes in franchise rules or have passed legislation easing the telcos' entry into the video marketplace.