Wednesday, November 2, 2005

FCC Asserts its Authority over Local Video Franchises

With the goal of spurring competition with cable companies and accelerating broadband rollouts, the FCC initiated its rulemaking process to address the issue of local franchising for video services.

The FCC has tentatively concluded that the Communications Act prohibits local authorities from refusing to award a franchise, and that it regulates a broader range of behaviors. The FCC believes this legislation empowers it "to take steps appropriate to ensure that the local franchising process does not serve as an unreasonable barrier to entry for competitive cable operators. "

The FCC Notice of Proposed Rulemaking raises a range of questions, including:

  • Are local franchising authorities unreasonably refusing to grant competitive franchises.

  • What problems have cable incumbents encountered with LFAs, including how best the Commission can ensure that the local franchising process is not inhibiting the ability of incumbent cable operators to invest in broadband services.

  • The Notice seeks comment on whether the Commission has authority to establish a minimum amount of time for potential competitors with existing facilities to build out their networks beyond their current service territories. It also seeks comments that address what would constitute a reasonable minimum timeframe.

  • Finally, the Notice asks whether the Commission should address actions at the state level, to the extent that it finds such actions create unreasonable barriers to entry for potential competitors.

The FCC plans to hold a hearing to supplement the record in this proceeding.

Some commentary:

FCC Chairman Kevin Martin: "In passing the 1992 Cable Act, Congress recognized that competition between multiple cable systems would be beneficial. Indeed, Congress specifically encouraged local franchising authorities (LFAs) to award competitive franchises. Congress recognized that it is important to have multiple competitors in the video market. Congress also recognized that LFAs had played, and would continue to play, an important role in the cable franchising process. However, Congress restricted their authority in this area in order to promote cable competition. Specifically, Section 621 of the statute prohibits LFAs from granting exclusive franchises and from unreasonably refusing to award additional competitive franchises."

National League of Cities (NLC) Chairman Ken Fellman: "The ability of cities and towns to negotiate and enter into agreements with providers of video services has been clearly defined by the Federal Communications Act. This recognition of local authority acknowledges that municipalities are in the best position to negotiate agreements that address our local infrastructure needs, protect our local streets and sidewalks, address customer service and consumer protection issues on a local level, and ensure that all citizens are served by the media in their neighborhoods. In the same way that the federal government manages the use and private-sector cost for broadcast spectrum, local governments are responsible for ensuring that public land is appropriately used, and that our citizens are appropriately compensated for the private use of public property.

"FCC staff have assured NLC that this Notice does not indicate any decision on their part that action in the video franchise area is necessary at this time. We note that the FCC has tentatively concluded that local governments are specifically authorized to impose build-out requirements, prohibit redlining, and secure public access channels. Nonetheless, because Congress has granted the FCC only minimal authority to influence local franchises, we view with concern any future FCC action to limit local involvement beyond its statutory authority."

See also