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from: Mondaq

United States: Communications Law Bulletin, September 2006
12 October 2006
Article by Charles H. Kennedy
The Month in Brief (excerpt)

Legislative Developments

With Congress set to recess at the end of October, many observers and analysts are predicting that Congress will not pass communications reform legislation before the November elections or even before the end of the year. Senate Commerce Committee Chairman Ted Stevens (R-Ak.) conceded that, as of September 21, he was unable to round up the necessary 60 votes to avoid a filibuster on the Senate bill (HR-5252). Even if the 60 votes could be obtained, another hurdle to passing the bill this year is clearing time on the Senate floor to allow 60 hours of debate, as required under Senate procedural rules. The Senate bill continues to face strong opposition from Democrats seeking Net neutrality provisions, although portions of the bill, such as video franchise reform, enjoy strong bipartisan support. Some have speculated that the bill could be passed this year if it is segmented into separate bills, but Sen. Stevens has insisted that he will not section off portions of the bill or attempt to attach it to an appropriations or other bill in order to increase its likelihood of passage. It is unclear how a possible change of control of one or both houses of Congress would affect the bill’s prospects when Congress returns after the November elections.

On a separate matter, the Senate on September 13 passed a voice-over-Internet protocol ("VoIP") E911 measure (S-1063) as part of a port security bill. The measure would require telecommunications carriers to offer VoIP providers access to 911 services. It also would direct the FCC to adopt VoIP E911 access rules within 90 days after enactment and would allow states to impose fees to support E911 services. It no longer contains waiver or grandfather provisions that would have exempted certain noncompliant providers from complying with E911 requirements. The measure is based on a House bill and therefore may be easily reconciled in conference. Some have speculated, however, that the measure may be dropped in conference in order to provide an incentive for the Senate to pass HR-5252, which contains similar VoIP E911 provisions.

Video Competition Developments

California Legislature Passes Statewide Video Franchise Legislation
The California legislature has enacted a video franchising bill, which Governor Arnold Schwarzenegger is expected to sign. If the bill becomes law, California will be the eighth state to provide statewide video franchising and to ease entry into the video market by competitors. Other states that have approved statewide franchises include Indiana, Kansas, New Jersey, North Carolina, South Carolina, Texas, and Virginia. The addition of California to this list would mean that one third of the U.S. population lives in jurisdictions that provide statewide franchises.

Under the legislation, new entrants would be able to apply to the California Public Utilities Commission ("CPUC") to obtain state franchises after the CPUC drafts new application procedures. Incumbents also will be able to obtain statewide franchises at that time and can opt out of a local franchise agreement upon entry by a video competitor. State franchise holders will be required to pay franchise fees of up to 5 percent and to satisfy state antidiscrimination and staggered buildout requirements.

Many predict that the steady progression of states adopting statewide franchises decreases the odds of national franchise legislation, particularly because federal legislation appears bogged down in the Net neutrality debate.

Verizon Settles with Montgomery County, MD; Obtains Video Franchise
Verizon reportedly has entered a deal with Montgomery County, Maryland, to provide its FiOS video service in the county. Verizon reportedly has agreed to request dismissal of its suit against the County in federal court in Baltimore if the County Council approves a franchise agreement. Verizon apparently has agreed that FiOS customers will pay a 5 percent franchise fee on video service and another 3 percent public access channel fee. Verizon also will provide 100 public buildings with free video and pay $1 million in related fees over 5 years. A public hearing is set for September 28, 2006, in Rockville, Maryland.

Michigan Introduces Revised Statewide Franchise Bill
A new statewide video franchising bill has been introduced in the Michigan legislature as a similar bill has been languishing in committee for six months. The new video bill would transfer video franchising authority to the Public Service Commission from municipalities. Franchise fees would be allowed up to 5 percent of gross receipts and carriage fees, but could be passed through on customers’ bills. Fees from telecom or Internet services would be exempt from franchise fee requirements. The legislation also includes staggered buildout requirements, but would permit satisfaction of the buildout requirements through use of satellite or wireless technologies. New entrants would be required to provide one or more public access channels and to pay up to 1 percent of gross revenue as public, educational, and governmental support. The proposed legislation also would require new entrants to provide municipalities with 30 days’ notice of infrastructure upgrades for video services. The bill would permit incumbent cable providers to negotiate the terms of franchise buy-outs with municipalities. Also counted would be any payments for carriage from program providers.