FCC Approves Rules For Cable Franchise System

20 December 2006
By Corey Boles Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The Federal Communications Commission on Thursday voted in favor of new rules governing the franchise system that exists across the U.S. for new entrants seeking to providing television service to consumers.

The new rules are aimed at making it easier for potential competitors to enter the video market. They are particularly aimed at facilitating entry by telecommunication companies such as Verizon Communications (VZ) and AT&T Inc. (T), who are keen to expand their presence in the video market.

FCC commissioners voted 3-2 along party lines at the agency's monthly public meeting in favor of the new rules, which would impose a 90-day deadline on local governments to decide on whether to grant a new franchise.

They would also strike down requirements for new entrants to provide service to all residents in an area, known as buildout requirements.

The rules state that in most circumstances the existing standard that local authorities can't charge a fee more than the accepted 5% of gross revenues should be followed.

They would also prevent local governments from making demands of potential licensees, which are seen as being unreasonable or unconnected to the provision of video service.

Chairman Kevin Martin has been a keen supporter of the reforms and his fellow Republican commissioners Robert McDowell and Deborah Taylor Tate voted with him.

'American consumers are demanding even more competition, and this is the goal of our action today: more competition through deregulation,' said McDowell in supporting the new rules.

In his comments, Martin linked the spread of broadband Internet access across the country to that of video saying providers would be unwilling to offer broadband service unless they were also allowed to offered video service.

The so-called 'triple play' of offering video, broadband and landline services to consumers is widely seen as a lucrative market by both telecommunications and cable companies.

McDowell referred to future rules the FCC planned to bring forward within six months that would extend the new rules to incumbent players in the marketplace. Traditionally, cable licenses are granted for between 10 and 15 years, at which time they have to be renewed.

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