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from: Broadcasting & Cable

Stevens OK With Build-Out Info Addition
By John Eggerton, STAFF

The Senate Commerce Committee began its second day of hearings on video franchise reform with Chairman Sen. Ted Stevens (R-Alaska) trying to accommodate a host of groups in marking up a bill that will pass committee and the Senate floor.

The committee quickly passed the mangers amendment, which had been modified from last week to include provisions pushed by city governments, including extending the franchise shot clock from 75 to 90 days, that is the time cities have to strike and agreement before a new video franchisee can seek a standardized franchise from the FCC. It also carified the definition of video service provider to include IPTV services like that of AT&T, which has argued that its Internet-based service did not need a franchise.

Stevens supported an amendment, introduced by Senator Barbara Boxer (D-Calif.), that would require new video franchise holders to inform localities of where they planned to build their system, and then let them know of any changes to that plan. It does not set any build-out requirements, however.

That is short of the build-out requirements that many Democrats have been pushing, but it is farther than the base bill had previously gone. Boxer had other build-out related amendments she offered later in the hearing.

Stevens support was provisional, however, contingent on striking a portion that would have alerted incumbents to the new entrants' build-out plans. Boxer agreed and they will try and work out language that can be inserted into the bill.

Senator John Ensign (R-Nev.) had several build-out amendments that he said he would withdraw and re-introduce on the floor. Stevens said he hoped he would reconsider offering them at all.

Stevens also supported an amendment from Senator Jay Rockefeller (D-W.Va.) that will require the FCC to finish its study of the effect of violent programming on kids. It began the study, under Congress direction, in 2004, but has yet to report to the Hill.

That initial comity, the addition of an FCC Bureau of Indian Affairs and a review of the definition of broadband added without incident, the withdrawal of a number of amendments to the obvious approval of the chairman--there were 100 to go through--devolved somewhat as more amendments began to be considered. The Universal Service Fund, which pays for telecommunications service to rural and underserved areas, was the subject of about an hour's worth of debate, more than Stevens had obviously hoped for.

Voted down was an amendment that would have turned the one-time $1 billion funding for first responder communications into an ongoing "entitlement" as Stevens put it, taken from the Universal Service Fund.

The biggest early flare-up came over the issue of local review of the sale of a video service provider, a power the bill would remove.

Sen. Byron Dorgan (D-N.D.) offered an amendment restoring that ability, saying that localities need to make sure that any outstanding issues with the incumbent had been resolved and that the new purchaser would live up to the terms of existing agreements.

Stevens and other crafters of the base bill argued that allowing the cities to continue the review, and possibly put conditions on those sales, would put cable at a disadvantage vis a vis the telco video services whose entry is being streamlined.

Sen. John Sununu (R-N.H.) argued that it would hurt new entrants as well, since they would have to figure into their business plans the value of the franchise if they did ultimately have to sell, which would be reduced if it faced the potential of conditions placed on it by the local government.

Adelphia was invoked as a company whose service had degraded but whose sale to someone who could upgrade and improve service could be held up by reviews in 3,000 localities where it had systems.

After heated exchanges, the amendment was voted down--most Democrats voted for it, with one exception John Kerry of Massachusetts--and the Senators broke until 2:30 p.m.

The fireworks began again, with Senator Boxer introducing an amendment that would preserve basic rate regulation until a finding of effective competition in the market. The bill would remove rate regulation just as soon as a new entrant began service--currently, rate regulation is lifted after an overbuilder reaches 15% of the market.

Boxer said that cable rate regulation could be lifted as soon as its new competition had served one street, which would not, as a practical matter, be competition at all. If cable then raised rates, you would need a sports arena to hold the subscribers complaining about hose hikes, she said. Boxer said she was offering her colleages a chance to protect themselves from that backlash.

Stevens set aside the amendment and said he would work with Senator Boxer on changing the language to reflect that "a substantial portion was being served by the new provider" before rate regs were lifted. Ensign said he would be opposed to any rate regulation, which is what the Boxer amendment would represent.

Yet to be addressed was the red-hot-button issue of network neutrality, but build-outs and local review had already raised the temperature in what is billed as the cooling saucer of the Senate.

National Cable & Telecommunications Association President Kyle McSlarrow was happy with the proceeds so far:

"In particular we are very pleased that an amendment was defeated that would have undermined the bill's national framework by permitting states to adopt their own franchising schemes," he said.

"We are also pleased the committee defeated an amendment that would have re-imposed economic regulation on the sale and transfer of cable systems."

Finally, we applaud the committee for approving an amendment that reaffirms the interstate nature of VoIP service, which we believe strikes an appropriate balance between federal and state oversight of this emerging service."