Save Access

from: CNN

FCC's McDowell: Video Franchise Rules Extended To Cable Soon
Dow Jones
August 20, 2007: 02:15 PM EST

ASPEN, Colo. -(Dow Jones)- Federal Communications Commission staffers are finalizing plans to streamline the process of applying for a video franchise, in a move that would see the rules extended to incumbent cable companies, FCC Commissioner Robert McDowell said Monday.

Speaking at a conference hosted by free market think tank the Progress & Freedom Foundation, McDowell said he understood plans were coming together to extend the same relief that was granted to new entrants to the pay-television market earlier this year to incumbent companies.

When the FCC voted to enact a series of rule changes to make it easier for new entrants in the video market last December, McDowell said he wanted the same relief extended to the rest of the market.

It was widely reported at the time that McDowell had won a pledge from FCC Chairman Kevin Martin that he would extend the rules in exchange for his vote on the matter.

The video-franchise rules came into being in early March, meaning the six- month deadline would occur in the first week of September.

"We'll see what the draft says, but I understand the chairman is going to make good on his promise to get a draft circulated soon," McDowell said.

The newest FCC commissioner was taking part in a panel discussion alongside executives from Comcast Corp. (CMCSA), Verizon Communications Inc. (VZ) and eBay Inc.'s (EBAY) Internet phone service, Skype, about the state of regulation in the telecommunications industry.

In order for a new provider of video service, such as Verizon through its FiOS product, to enter a local market, that entrant must win a franchise from the local authorities.

While a handful of states have created statewide franchises, the majority of the U.S. still operates on a local basis, meaning a new entrant would have to seek literally thousands of licenses in order to be able to operate a national television service.

The FCC rules are aimed at streamlining that process. They place a 90-day shot clock on local governments to rule on a franchise application. The rules also prevent governments from making unreasonable demands on applicants or attempting to levy exorbitant fees on them.

The franchise system was created when cable was first developing as what was effectively a natural monopoly in the pay-TV market. In exchange for being allowed to offer service in a particular area, cable operators were subject to fees, build-out requirements and often other commitments to the local area.

The new FCC rules are controversial with groups representing local governments, which argue the federal government is infringing on their rights by setting guidelines in this area. Several groups have launched litigation against the FCC, although this has not delayed the rules' implementation.

In order for the rules to be extended to cable companies, the five-stong panel of FCC commissioners would have to vote by a majority to approve them. The rules that apply to new entrants were opposed by the panel's two Democratic members.