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from: MultiChannel News

Local Governments Question Statewide Video Franchises

TeleCommUnity Claims Telcos Haven’t Accelerated Deployment
By Linda Haugsted -- Multichannel News, 6/29/2007 12:46:00 PM

Laws moving video-franchising authority to the state level now exist in 21 states (including Illinois, where the governor is expected to sign the bill pending there), but the laws, promoted to speed franchising by competitors, have not accelerated deployment or lowered prices, asserted TeleCommUnity, an alliance of local governments promoting their role in franchising.

Gerry Lederer, an attorney for Washington, D.C., law firm Miller & Van Eaton, which advises cities, said in a telephone briefing with reporters Friday that Verizon Communications continues to negotiate with local communities for franchises, earning 810 over the past two years. That success runs counter to arguments, made to state legislatures, that local negotiations are a barrier to entry necessitating state legislation, he added.

Despite the passage of bills designed to speed competition in states where AT&T is the primary provider, that company has failed to launch its U-verse TV video service in one-half of the states it services where it has gotten relief from local franchising rules, Lederer said.

What the drive for state franchising has really been all about, he asserted, is "not serving two-thirds of households" in those states. Lack of build-out requirements will allow competitors to move only into neighborhoods that will be most profitable to them, plus just enough low-income communities to satisfy terms in some state laws, local officials asserted.

The telephone call was scheduled to give local governments' view of trends in the structure of statewide bills and whether the legislation represents improvements over previous regulatory regimes.

In Lederer's judgment, language of the bills has improved as more states take up the issue. For instance, the Ohio and Illinois bills prevent competitors from meeting deployment obligations with old technology like direct-broadcast satellite services in place of fiber-to-the-home or Internet-protocol-TV services, he said. More bills are specifying customer-service standards and designating what officials have enforcement oversight, he added.

Negotiators "stumbled" on bills in Kansas, Indiana and North and South Carolina when defining "gross revenues," he said. Definitions there require that franchise fees be paid on "all revenue generated by a subscriber" -- a definition that represents only 70% of an operator's revenue, as it does not tax advertising earnings or launch fees, among other things. Bills this year (except in Nevada) had broader definitions of gross revenues, which generates more revenue for cities and states, he added.