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FCC Clears Path for Telecom Video Services

In a 3-2 party-line vote, the Federal Communications Commission has approved changes to cable franchising laws (PDF) to more easily enable telephone companies to offer video services to local markets via their networks. The regulatory changes are especially welcome to companie like Verizon, which operates its FiOS phone/Internet/video service, and (in particular) for AT&T‘s nascent U-verse IPTV service.

The most significant change to franchise regulations stemming from the FCC vote is the elimination of most so-called “build-out” requirements, which were intended to insure that new services would be available to all residents in a given franchise area. Built-out requirements were instituted to insure cable companies didn’t “cherrypick” selected areas of their franchise for new services, leaving some residents without new services and, owing to franchise agreements, unable to seek out services from competitors. Buy rolling back built-out requirements, FCC chair Kevin Martin said the agency wants to find a balance between fostering widespread deployment of new services withut erecting barriers which deter new businesses from entering the market. Because, as many people know, the FCC’s attempts to de-regulate the cable industry and foster competition have yet to achieve any success in terms of lowering customer’s cable bills.

Other changes instituted by the FCC include a 90-day limit on local authorities franchising decision, a move designed to thwart some municipalities blocking new businesses coming into their markets by dragging out franchising procedures. The changes also lace a five percent ceiling on the fees municipalities can set on franchisees—although some localities have tried to step around fee caps by stipulating non-cash benefits from cable operators, like public works projects.

Some trade groups and, of course, the cable companies, aren’t particularly pleased with the vote: some question whether the FCC has the authority to institute these changes (some argue they must come from Congress), and, of course, cable operators aren’t very keen on opening up their franchises to competition—especially if that competition doesn’t have to play by the same set of build-out rules. Cable companies would, in theory, be able to operate under the new regulations when their franchises come up for renewal, but they have (obviously) been under the perceived onus of the previous build-out requirements for years. Others protest the FCC’s new regulations unnecessarily supersede local authority with federal regulation, and thereby undermine core tenets of federalism and local control.

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