News Headlines from the Oct. 28 Edition of the Radioshow: FCC Chair Wants to “Expedite” Teleco Video Franchises;

These are the media news headlines as read on the Oct. 28 edition of the mediageek radioshow: FCC Chair Wants to “Expedite” Teleco Video Franchises; FCC Democrats Try To Protect Public Interest in Big Telecom Mergers; House Commerce Committee Passes DTV bill.

FCC Chair Wants to “Expedite” Teleco Video Franchises

FCC Chairman Kevin Martin says that he wants to help consumers get cable-like video services from their local telephone companies. On Oct. 26 he told US Telecommunications industry convention that early next month the FCC plans to consider new regulations intended to force local governments to expedite the process for granting franchises to provide video services.

But he may be trying to fix a problem that only the telecom industry says is a problem.

Franchises are contracts between municipalities and video service providers that give companies access to the public right of way for installing cable lines. In exchange municipalities can negotiate for fees of up to 5% of the company’s local revenue. These fees are often used to fund public service and public access channels.

Martin was not specific about what the new regs would look like, but told convention attendees that he is asking his fellow commissioners to review “how the franchising process is working and what actions, if any, the commission should take to fulfill Congress’s directive that franchising authorities not grant exclusive franchises or unreasonably refuse to award additional competitive franchises.”

Up for interpretation is what Martin considers “unreasonable.” That’s because many municipalities refuse to grant franchises not because they want to block new video services, but because companies continue to get increasingly stingy with regard to the fees their willing to pay.

As major telecommunications companies like SBC and Verizon have gotten interested in offering video services to consumers over their broadband lines, they’ve also gone on the offensive against the local franchise agreements that their cable competitors have been subject to for more than twenty years.

Recently, Texas Republican governor signed a law eliminating local cable franchises, making the agreements negotiated statewide. This will make Texas the guinea pig for a policy that the telecom industry and many Congessional Republicans would like to see become federal law in 2006. Public interest advocates will be watching Texas closely to see what affect the loss of franchise revenue has on municipalities and on public service and public access TV channels.

Some observers see Martin’s effort to force municipalities to “expedite” franchise negotiations is intended to further spotlight the issue, making it easier for Congressional Republicans and telecomm lobbyists to portray municipal franchises as a problem that needs to be solved.

In addition to local franchise agreements, there are also concerns that telecomm companies may filter out video content on the Internet from their customers once they get into the cable business. These concerns were stoked this past week when SBC Chief Operating Officer Randall Stephenson was quoted in an industry newsletter saying, “We’re going to control the video on our network. The content guys will have to make a deal with us.”
Stephenson’s statement was widely interpreted to mean that his company intends to block on its broadband network the video content of any companies or producers who have not struck a deal with SBC.

SBC’s public relations people quickly jumped in to deny that interpretation, saying that the company did not intend to block any “lawful” content from consumers. The company said that Stephenson’s comment was only meant to refer to its television service, not its internet service.

For his part, Dave Burstein, says that Stephenson’s quote was not taken out of context, and that it was clear that he and Stephenson were discussing “video delivered directly, specifically that not in their package.”


FCC Democrats Try To Protect Public Interest in Big Telecom Merger

The Us will soon have two fewer telecommunications providers, and the nation’s two largest telecomm companies will get bigger. That’s because on Oct. 25 the Justice Department approved SBC’s acquisition of AT&T and Verizon’s purchase of MCI.

Together the companies will control 90% of the residential telecommunications infrastructure, and 70% of business infrastructure. Critics charge that the deal will again create regional telephone monopolies, stifling competition for telephone and data services.

The approval requires Verizon and SBC to lease to smaller competitors several hundred unused telecommunications lines that run to buildings serving mostly business customers. The leasing is required in 19 metropolitan areas where either company would be the only telecom provider.

Otherwise, the Justice Department placed no significant conditions on the deal.

The FCC was scheduled to make a decision on the merger today, as we were going into production on Oct. 28. but the start of the FCC’s meeting was delayed several times this afternoon as a result of extended negotiations between the Commission’s Republicans, who support the merger, and the Commission’s Democrats, who have reservations. The Commission is now scheduled to address the merger on Monday, Oct. 31.

Right now Democrats on the FCC are enjoying a little more influence than they normally would during a Republican administration. The FCC is still lacking a fifth commissioner to fill the seat vacated by former Chairman Powell earlier this year. And given the problems the Bush Administration is having filling Supreme Court Justice Sandra Day O’Connor’s chair, it still doesn’t look like the administration will have the opportunity to move through a nomination for the FCC seat anytime soon.

FCC democratic commissioners Michael Copps and Jonathan Adelstein would like to see safeguards protecting small businesses and consumers. They arereported to be seeking price protections for small businesses, who are likely to be negatively impacted by the industry consolidation that results from the mergers. Word is that the Dems would also like to see internet service unbundled from local telephone service, so that a household would be able to order DSL service without having to also have a phone line. They may also be looking to impose what is known as network neutrality, where a service provider would be prohibited from blocking or degrading content or service from competitors.

Republican FCC Chair Kevin Martin would like to see no conditions imposed on the deal.

House Commerce Committee Passes DTV bill

A hard and fast end date for analog TV broadcasts just got a little closer to reality this week when the House Commerce Committee passed its version of a digital TV transition bill. The Senate Commerce Committee passed its version on Oct.

The House approved a date that’s a little earlier than the Senate’s. The House bill calls for all analog signals to go dark on Dec. 31, 2008. the Senate’s date is April 7, 2009.

The House bill also addresses many more aspects of the transition to digital broadcasts than the Senate’s. It directs the FCC to start auctioning off vacated analog TV spectrum a little less than a year before all analog TV ends. $990 million of those funds would be earmarked to help households buy converter boxes that allow analog TVs to receive digital broadcasts. By contrast, the Senate earmarked $3 billion.

The federal government is expected to reap $10 billion from the spectrum auction.

The House subsidy would give 10.3 milliion households the opportunity to first-come first-served basis a $40 voucher toward the cost of a converter box, with a limit of two per household. An estimated 43 million households still cannot receive digital TV signals.

The Senate’s bill instead allows households to buy an unlimited number of converter boxes for just a $10 co-pay each. Converter boxes are expected to cost at least $60 in stores.

House Commerce Committee Democrats tried in vain to get the Republican majority to expand the converter box subsidy by sending a voucher to every US household, rather than limiting the program to the first 10.3 million households that request one. They accused Republicans of instituting a so-called TV Tax on the households that miss out on the converter box vouchers.

The House DTV bill is now on its way to the budget committee before it goes to the House floor as part of a budget bill. The Senate’s DTV bill is taking a similar route. If both bills pass, then they will have to be reconciled in conference.

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