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FCC approves telco video franchise reform

December 21, 2006

Siding with the telcos, the FCC voted 3-2 late yesterday to approve several major changes in the way that video franchises are awarded to traditonal phone companies.

Local franchising authorites now have five dictates they must operate under when considering franchise apps from telcos. They must:

  1. Take 90 days or less to either reject or accept a franchise proposal. The limitation goes up to 6 months if the applicant has not yet secured right of way;
  2. Cannot impose "unreasonale" build-out requirements that would in essence, require an incumbent to serve an  entire franchise before requiring local phone companies to initially build out beyond their telephone footprint. Reasonable requirements could include some time-frame benchmarks or market success;
  3. Franchises cannot be arbitrarily limited to a 5% franchise fee cap;
  4. Should promote cost-sharing of public, educational or government channel expenses rather than imposing their own rules;
  5. Local franchise authority is generally now limitedto cable service over cable systems, rather than ancillary services.

Verizon praised the decision.

"Today’s action will fast-forward the delivery of new choices, lower prices and better services to consumers," Verizon said.  "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."

Democratic FCC Commissioner Jonathan Adelstein was harsh in his criticism, calling the decision one that federalized the local franchise process. He added that these edicts were legislation disguised as regulation.

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