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from: Broadcasting and Cable

Buildout Big Winner In State Video Franchise Laws

By John Eggerton -- Broadcasting & Cable, 6/29/2007 12:12:00 PM

Buildout requirements have been the big winner in the proliferation of statewide video franchising adopted by 21 states to date.

That's according to Gerry Lederer, legislative council to TeleCommUnity, an alliance of local government officials trying to maintain oversight over telecommunications service in their localities.

Lederer pointed out on a call with reporters Friday that of the first six states to adopt statewide franchises, only one, Virginia, required franchisees to meet buildout requirements, i.e. to provide service to specific areas or percentages of the total households. Of the last nine states to adopt statewide franchise, he said, five have required build-outs.

He also said it was a good sign that increasingly those build-outs did not include meeting that obligation with DBS service, but required a wireline buildout. He said the best laws were in Virginia and New Jersey, where they talk about an eventual 100% build-out.

He pointed out that neither the House or Senate national franchise bills--which failed to pass--had any buildout requirements (much to the chagrin of Democrats on the relevant committees).

Lederer talked about three other key metrics, saying that the issue PEG (public, educational and government channel) requirements was a "maturing" debate, saying that one issue is whether a Web stream can suffice for the PEG requirement and who is responsible for providing the interconnection from, say, a county council meeting or high school football game, to the headend. He said Illinois' new state franchise law, which has yet to be signed into law, provides should be the model since it requires the franchise to provide the interconnection and says the streamed channel must be equivalent to a tradition PEG channel.

He also said that on the issue of compensation, all the recent state franchise laws have taken a broad definition of gross revenues--franchisees generally have to pay localities 5% of gross revenues--which include advertising and marketing rather than just subscription fees.

The new beachhead, he said, is consumer protection. Early laws, he said, relied on an FCC baseline of protections, with cities free to negotiate more protections if they could. Now, he says, states California, Texas and New Jersey, are making enforcement part of application process by providing benchmarks and holding franchisees to them.