More states pursue video-franchising bills

As the federal video franchise debate forges on, telecommunications service providers are taking the issue into their own hands at the state level. Following the example set by Texas last year, nine states have granted telephone companies statewide franchising rights, and six states — California, Iowa, Michigan, New Jersey, North Carolina and Tennessee — are currently considering legislation that would affect local control over access.

Telephone companies have been campaigning hard for statewide franchise rights. They argue that existing rules for local franchises are inefficient and limit competition. Statewide franchising opportunities would give consumers more choices and lower prices, an AT&T spokesman said.

“There is a need in the communications market for an alternative to cable companies,” he said. “Cable companies have dominated the TV and entertainment market, and consumers have endured higher prices and not a lot of choice for too long.”

Local cable providers, however, are fighting to defend their territory. Local regulators also do not want statewide regulation that would undercut their authority and ability to collect revenue. According to Jeff Arnold, deputy legislative director for the National Association of Counties, new statewide mandates are just not necessary.

“The reality is that local governments have been able to manage video buildout and the video systems very effectively across the country,” Arnold said. “The claims that they are somehow in the way of new entrants or competition are simply not correct. We are very interested in competition, and we think that there are ways to amend how we do it currently to speed up the process.”

Specifically, Arnold says that borrowing a “shot clock” system from the NBA might be the answer. Requiring telcos to take certain action in a certain period of time at the local level would be more effective than entirely new legislation, he said. Arnold recommends a deadline of 90 business days, rather than the current 90 calendar days as drafted by the FCC.

Despite dissent, state franchising may soon be a reality in many states. California and New Jersey have recently taken the spotlight in the debate. New Jersey's proposal calls for holding Verizon to a partial buildout standard — it must build out to New Jersey's 60 largest cities, communities with a population of 7111 residents per square mile, within the next six years. The proposal also sets franchise fees at 2% and includes fines for economic discrimination.

Like New Jersey, California's proposed legislation would raise franchise fees, but hold telcos to a partial buildout requirement. Opponents call California's proposed legislation a particularly vicious bill, citing that it authorizes redlining and assigns no penalty for underpayment.

“If a new entrant is required to build out in only one neighborhood that has a high percentage of computers and televisions, but not in another neighborhood — is that high competition for the community? Not really — it is for the neighborhood, but not the community,” Arnold said.

To date, video franchising legislation has been passed in Arizona, Indiana, Kansas, Kentucky, Louisiana, New York, South Carolina, South Dakota, Texas and Virginia.