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FCC Votes Along Party Lines To Boost Cable Competition
[December 20, 2006]

FCC Votes Along Party Lines To Boost Cable Competition

Group Editorial Director
 
The FCC (News - Alert) voted today — along partisan lines — to clear the way for increased competition in the cable space. The gist of the ruling is that local cable franchise authorities will have to act within a specified timeframe upon new applications from competitive service providers. Competitors who have access to local rights of way are entitled to a response within 90 days. Franchise authorities need to act on applications from other new competitors within six months.
 
According to an Associated Press report, “The FCC will also ban local governments from forcing new competitors to build out new systems more quickly than the incumbent carriers and to count certain costs required of new carriers to go toward the five percent franchise fee they must pay.”

 
At the heart of this contentious issue was a question of how such a move would stand to benefit consumers. The question is now going to be put to the test: Will increased competition result in lower prices for consumers?
 
Traditional telecom companies like Verizon and AT&T (News - Alert) have long lobbied Washington to lower the barriers to entry, thus allowing them to obtain coveted local franchises to deliver video programming.
 
Kyle McSlarrow, President & CEO of the National Cable and Telecommunications Association (NCTA (News - Alert)), wrote several weeks ago in his blog that competition was already sufficient and that consumers were proving that out by subscribing to alternative methods of receiving “multichannel video services.”
 
Wrote McSlarrow, “Whereas 15 years ago, cable commanded 95% of the multichannel-television market, cable’s market share today has fallen to 68% of pay TV households. And we all know that the big goliaths in telecommunications — the former Bell telephone companies — have jumped headfirst into video. They now offer their own service to millions of consumers.”
 
Responding to the FCC ruling, Susanne Guyer, Verizon (News - Alert) senior vice president for federal regulatory affairs, issued the following statement:
 
“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.”
 
In response to today’s FCC decision, NCTA’s McSlarrow had this to say:
 
“The FCC’s pricing survey fails to account for the benefits of bundled pricing, its favorable impact on cable prices, and the greatly increased value of cable services in a digital world. Ignoring these factors makes the pricing survey obsolete on arrival and an unsound basis for policy decisions.
 
“On today’s decision on video franchising, it appears that the FCC pared back some of the more troubling proposals that had been floated in recent days. The Commission made crystal clear that its order isn’t a license for AT&T to ignore the franchising process and operate under different rules from its competitors. In addition, the Commission stepped back from pre-empting all state franchising laws, many of which have acknowledged the value to consumers of a level playing field for all competitors. We appreciate the FCC’s commitment to complete action within six months on a further notice to address regulatory parity.
 
“But the simple fact is that today’s order doesn’t provide a level playing field, a concept that has been universally supported up until now at federal, state, and local levels. We don’t believe the Commission has the legal authority to establish separate regimes for incumbents and new entrants in today’s highly competitive marketplace.”
 
According to industry analyst, Jeff Kagan, “With this vote, competitors won’t have to deal with different rules and requirements from every market they want to enter. It sets out a set of national rules that will clear the way and should speed up the Baby Bell entry into television from coast to coast.
 
“The Baby Bells still have to upgrade their networks so this will not be an instant solution, but at least it clears the way so the phone companies can compete with the cable television companies and that is the result the marketplace wants. That is the result that should cause cable television rates to drop because they will have competition sooner rather than later.
 
AT&T’s Senior Vice President of Federal Relations, Bob Quinn, issued the following comments today:
 
“The FCC has wisely determined that the pace of video competition and broadband deployment should not be held hostage to the administration of a franchising process created for monopoly cable providers.
 
“We are heartened that the FCC, just as 9 states, has recognized that the existing local franchising process limits consumer choice and investments in broadband infrastructure. The FCC has taken steps towards streamlining the franchising process by establishing reasonable timeframes within which local franchising authorities administer their responsibilities.
 
“AT&T is focused on providing consumers with a real and robust video alternative to incumbent cable companies. At the same time, we are attentive caretakers of legitimate local interests, and we will continue to abide by those obligations, such as local management of rights-of-way, support for franchise fees and government and educational programming.”
 

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