Yesterday, the U.S. Federal Communications Commission voted in favor of new guidelines that would alter the national franchise system and streamline the process for new companies like AT&T and Verizon to enter the television business with their new IPTV service offerings.
Here are some of the more vivid headlines that amused us: Divided FCC ignores Dingell, approves new cable rules
, The FCC Shafts The Locals
, Local officials blast FCC vote on cable TV rules
, Will FCC Martin-ize Cable?
, FCC opts to unclog cable route
, Cable chief: The FCC hates us
, Why the New FCC Rules May Bring Lawsuits
The Commissioners voted 3-2 on the initiative with Chairman Kevin Martin and his fellow Republican commissioners Robert McDowell and Deborah Taylor Tate voting in favor. Democrat Commissioners Michael Copps and Jonathan Adelstein voted against the new guidelines.
The new rules will force state and local governments to decide on whether to grant a new franchise within 90-days. It will also remove the requirement that new providers will need to expand service to all residents in an area.
FCC Chairman Kevin Martin also released a report stating cable prices, on average, have rose 5.2 percent in 2004. The report also shows that rates from 1995 to 2005 increased a total of 93 percent.
New Franchise reform is of huge concern to AT&T's U-Verse service and Verizon's FiOS TV service. Verizon responded immediately to the news with, "The Federal Communications Commission today took steps to speed the entry of new competitors into the cable television market by streamlining the local franchising process through which companies gain approvals to offer subscription television services."
Back in February of this year, Verizon Chairman and CEO Ivan Seidenberg spoke to Congress urging them to reform the franchise approval process because it effectively delays consumer choice and price competition in the consumer video market by impeding rapid entry by market insurgents. (See Verizon CEO to Congress: Time for Consumer Choice and Price Competition in Video Market
Why do the large companies like AT&T, Verizon, and Qwest want such reform? The companies have claimed that local governments create over-the-top demands for newcomers. Additionally, passing one state or national franchise agreement is much quicker than negotiating thousands of local agreements.
The end of last year, the FCC was investigating local government practices due to complaints from Verizon. BusinessWeek reported that, "In one community, for example, officials want Verizon Communications Inc. to connect all of the local traffic signals with fiber, according to a company filing with the FCC. Another town wants Verizon to provide funds so the community can purchase street lights from the local power company." (See FCC Investigates Local TV Franchising Practices
It's no surprise that the telephone companies are celebrating the news. Susanne Guyer, Verizon senior vice president for federal regulatory affairs, stated, "Today's action will fast-forward the delivery of new choices, lower prices and better services to consumers. The FCC is standing up for consumers who are tired of skyrocketing cable bills and want greater choice in service providers and programming. Verizon has an aggressive schedule to deploy FiOS TV. This order will enable us to reach agreements with local franchise authorities more quickly so we can deliver the benefits of competition to consumers faster. The FCC has taken strong steps to increase consumer choice and spur investment in broadband and video deployment."
However, the vote has already sprung backlash among Democrats who said they would threaten legal action. Incoming chairman of the House Energy and Commerce Committee, representative John Dingell, a Democrat of Michigan, wrote, "It would be extremely inappropriate for the Federal Communications Commission to take action that would exceed the agency's authority and usurp congressional prerogative to reform the cable television and local franchising process."
For more information on the video franchise reform debate, visit our IPTV Regulation