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from: Xchange Magazine

Muncipalities Take FCC to Court in Video Franchise Fight

04/05/2007
Bob Wallace

Several groups representing municipalities have asked a federal appeals court to throw out the FCC’s national video franchising order.

The organizations on April 3 said the agency’s rules would “severely restrict” local government’s ability to protect citizens, rights-of-way, community channels and public safety networks.

The Alliance for Communications Democracy, Alliance for Community Media, National Association of Counties, National League of Cities, National Association of Telecommunications Officials and Advisors, and The United States Conference of Mayors also contend the FCC order reduces the money local governments make off franchise deals. They further say it threatens to cut off cable services to government buildings and schools.

FCC commissioners approved the order in December and finalized it in March. It created a national video franchising process – overriding state and local requirements – to make it easier for new entrants such as telcos to secure video franchises. Telcos said they had to succumb to onerous requirements such as paving parking lots and planting flowerbeds before receiving franchising approvals from some cities and towns.

The FCC said it will see how the groups’ suit progresses before it takes any action, and defended its franchising order.

“We think there’s evidence of unreasonable denials to competitive franchises,” said an FCC spokesman. “Cable prices have gone up every year since 2006, while prices of other communications services have gone down.”

Verizon Communications Inc., however, one of the most aggressive lobbyists for national video franchising, said it will hold its ground and fight the organizations’ lawsuit.

“Verizon supports the FCC’s efforts to stand up for consumers who are tired of skyrocketing cable bills and want a choice in TV providers,” said a spokesman for the telco. “We believe the FCC's order is well-founded and plan to participate in any appeals to defend its conclusions.”

A spokesman for the National Cable & Telecommunications Association declined comment.

Video franchising has been a front-burner issue for the past couple of years, at the federal and state levels. New entrants including AT&T Inc. and Verizon have rushed to deploy IPTV in areas where they compete directly with incumbents, mostly cable operators. Telcos have argued that town-by-town video franchising rules cost them time and money, and lack, among other things, consistency. So, they appealed to federal and state authorities for a streamlined process.

The FCC considered video franchising throughout 2005 and 2006, finally approving its order in December. That move incurred the wrath of cable operators and cities alike.

During the span of FCC inaction, however, telcos also were lobbying state legislators. States including California, Indiana and New Jersey last year responded with laws easing the franchising process. AT&T and Verizon quickly cashed in and landed new deals in those regions.

All is not smooth sailing for them, however. The carriers now face disputes with some city leaders. For example, negotiations between AT&T and the City of Naperville, Ill., recently resulted in an angry impasse, and Milwaukee, Wis., has filed a lawsuit against the carrier.

– Kelly M. Teal contributed to this report