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FCC Video Franchise Vote Out of Bounds

January 1, 2007
By Marianne Paskowski

Just days before Christmas, the Federal Communications Commission in a 3-2 vote removed a barrier for phone companies entering the video business by mandating that municipalities must decide on franchise requests within 90 days, not the usual six-month window or more that cable incumbents have endured for decades.

Bad, bad move.
The National Cable & Telecommunications Association is now making noises that it will sue the FCC, saying that the commission has overstepped its bounds. Likewise, the National League of Cities grunted in, saying that the new mandate blocks local governments from making decisions on their own. That is true.

And even Rep. Ed Markey (D-Mass.), who is the incoming chairman of the House telecommunications subcommittee, chimed in that he would begin studying the implications this year. OK, so what exactly are the implications?

Too many to count. For starters, FCC Chairman Kevin Martin, a Republican appointed by President Bush, has just created an un-level playing field, favoring newcomers over the incumbents. To anyone except the telcos, that’s simply unfair, creating two different sets of rules for companies that are providing the same services.

So far the old rules have worked just fine, even for the phone companies, which in some cases have managed to secure statewide franchise approval in several states. Not shabby local lobbying on their part, I have to say. Even now, under the old rules, and newer local regulations governing statewide franchises, the giant and rich phone companies have already managed to secure hundreds of franchises. What was Chairman Martin thinking? Obviously he thinks his latest shortcut for the telcos will jump-start competition and favor consumers in the end. It won’t.

Instead of spurring competition, Chairman Martin’s new dictum could actually slow it down, as local municipalities are most likely unwilling to make any decisions about telco entry into video before the dust settles with the FCC after the lawsuits, which are sure to come. And those outcomes could take forever.

Frankly, local cable franchises are just that-local-and vary town by town; they are not the business of national government.

What Chairman Martin doesn’t seem to realize is that the phone companies have deep pockets and are perfectly capable of procuring franchises where they want them, in mostly affluent communities. Another provision in the new FCC mandate says that towns can’t impose unreasonable requests for franchise approval.

So what is an unreasonable request from a town? In the art of negotiation, maybe there’s no such animal if both parties really want the deal to happen. Sure, you’ve read reports about towns asking for swimming pools in the approval process for a franchise. So what? It’s their business.

The phone companies don’t need the help of the FCC. Unfortunately, cable has already given them plenty of talking points to take to the negotiation table. For example, many cable multiple-system owners have decided that they want to get out of the local programming origination business. The PEG (public, educational and government) channels, to date, have been a big part of the deal for a town to grant a franchise and extract a franchise fee, usually in the neighborhood of 5 percent or less, depending upon the shrewdness of the negotiators.

God, that dumb move by cable is candy for telcos to dangle in front of local franchise officials. In my mind, at least, cable abandoning PEG gave the telcos a big leg up, and not this silly 90-day franchise approval ruling from the FCC.

Sure some towns might want a swimming pool in exchange for granting a franchise, but most town officials want to see their local meetings aired on local access channels. So my advice to Chairman Martin is to get out of the deep end of the pool. You’re in way over your head here.

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