California legislature passes video reform

California is poised on the verge of statewide video franchises after the General Assembly passed a video franchise measure Thursday by a vote of 66-6.

The state Senate passed the measure earlier in the week, and the bill now awaits the expected signature of Gov. Arnold Schwarzenegger. It would allow both telecom service providers and cable companies to obtain a statewide video franchise.

The bill benefits both AT&T and Verizon, which are building out fiber optic networks in California, but it also stands to help Cox Communications, which has been embroiled in a dispute with San Diego officials over the geographic limits of its franchise there.

Under terms of the statewide video franchise, local municipalities would get at least one percent of gross revenues in exchange for access to public rights of way.

“This will allow the phone companies to start investing in delivering television to California,” said telecom analyst Jeff Kagan in an e-mail post. “Enabling telephone companies and cable television companies to compete will change the marketplace into a customer- and competitive-driven marketplace as opposed to the company-driven marketplace it is today. Prices should come down and innovation should go up. This should be beneficial to the customer and ultimately to the investor as there will be more competing companies to invest in. We have to hope both sides are successful. If the phone companies and the cable companies continue to compete and split the marketplace 50-50, then the customer will continue to win, and the companies will continue to win.”

Nine other states have already passed statewide video reform measures and five more--Iowa, Michigan, New Jersey, North Carolina and Tennessee--are currently considering such action.

National video franchise rules are also pending in both the House and the Senate.

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