FCC eases telecoms' move into cable TV

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The Federal Communications Commission yesterday voted to make it easier for telephone companies to sell television service, saying the current patchwork of local rules inhibits competition and keeps prices artificially high.

The measure, approved by a party-line vote of 3-2, imposes several restrictions on local officials when they consider video-franchise applications. Most notably, it orders authorities to make a decision in 90 days if a company has an existing franchise license and limits franchising-fee requirements.

"I am pleased that the steps taken by the commission today will expressly further [video] competition and help ensure that lower prices are available to as many Americans as possible as quickly as possible," said FCC Chairman Kevin J. Martin, a Republican.

Mr. Martin said prices would be lower and service would be better if more companies sold television service. He criticized local governments for acting as barriers to entry by allowing the franchise-application process to drag on and demanding unreasonable concessions from companies.

A regulatory tug-of-war between cable and phone companies has intensified as the services provided by the two industries continue to converge. In a quest for the lucrative "triple play" of phone, Internet and television, cable-TV companies are offering phone and Internet service as phone companies seek to enter the Internet and video markets.

Telecommunications giants AT&T Communications Inc. and Verizon Communications Inc. have been pumping billions of dollars into video networks. The companies need to obtain thousands of local franchises to deliver their video services nationwide.

"This order will enable us to reach agreements with local franchise authorities more quickly so we can deliver the benefits of competition to consumers faster," said Susanne Guyer, Verizon senior vice president for federal regulatory affairs. Locally, the company is licensed to sell its fiber-optic television service in four Maryland counties, five Northern Virginia counties and 11 area cities.

Municipal governments hotly contest the order as a usurpation of their authority.

"I'm obviously extremely disappointed," said Marilyn Praisner, president of the Montgomery County Council and chairwoman of TeleCommUnity, a national lobby group of local franchising authorities. "I think what was delivered to consumers today was a stocking full of coal."

Montgomery County last month approved a Verizon video franchise after the company filed a lawsuit this summer accusing the county of making "unlawful demands."

Mr. Martin yesterday cited instances in which franchising authorities have required phone companies to make "extraordinary in-kind contributions" like building swimming pools and recreation centers. But Arlington County Cable Administrator Rob Billingsley said such requirements are well within a local government's prerogative.

"It's kind of like starting a business in somebody else's building. You're expected to pay something for that. It could be money, it could be other things," he said, adding that cable prices have not fallen since the county gave Verizon the green light to offer video service.

The FCC was not detailed in its discussion of a major sticking point: "build-out" requirements that force phone companies to deploy their video networks to all parts of a region in which a franchise is obtained. The order said imposing "unreasonable" build-out requirements would be an "unreasonable refusal to award a competitive franchise," but was not more specific.

Telecommunications companies have argued they shouldn't be forced to expand their networks when it isn't in their financial interest. Critics counter that relaxing build-out requirements would result in a lopsided network where wealthier homes are connected while less affluent areas are ignored.

A spokeswoman for the National Cable & Telecommunications Association said the cable industry group has not decided if it will challenge the order in court.

In a letter earlier this week, Rep. John D. Dingell, Michigan Democrat and the incoming chairman of the House Energy and Commerce Committee, questioned the FCC's authority to impose cable-franchising reforms, contending that such action would be "extremely inappropriate."