Tuesday, February 14, 2006

Telcos Urge Video Franchise Reform, Cable Operators Object

The U.S. Senate Commerce Committee heard from major telecommunications carriers, cable operators and consumer groups on the question of new video franchising rules. Here are highlights from some of the testimony.

Verizon's CEO, Ivan Seidenberg: "Verizon believes a streamlined national video franchising process -- combined with our willingness to ensure that legitimate local concerns are met -- presents a win-win for localities, consumers and the marketplace. Consumers gain a long-delayed competitive edge and a true, superior choice for video services. State and local governments preserve and possibly grow revenues. The marketplace will see continued growth and investment in fiber deployment across the country, as demand for broadband services continues to grow."

AT&T's Chairman and CEO, Edward E. Whitacre, Jr. : "I will confine my remarks to five basic points. First, more than 20 years after the passage of the Cable Act, cable operators are still not subject to effective competition. Second, the best evidence of the lack of effective video competition is that, unlike the pricing trends in every major segment of the communications marketplace, cable prices continue to rise --over three times the rate of inflation. Third, new video providers stand ready to bring real competition to the video market, but this cannot happen if they must first negotiate thousands of separate local franchises. Fourth, Congress should enact legislation that encourages video competition in the same way it has encouraged competition across the communications industry -- by removing legacy barriers to entry. Five, in doing so, Congress can and should protect legitimate local interests by both requiring that all video providers pay a reasonable, consistent fee to municipalities and maintaining the cities' long-standing authority over public places and rights-of-way.

Cablevision Systems' COO, Tom Rutledge: "Our primary concern is ensuring that we face our competitors -- including the phone companies -- on a level playing field. A level playing field means that succeed or fail based on innovation and effort rather than because our competitors may get better rules. Franchising is an important part of fair competition. Our franchises contain commitments that are important to the communities that we serve, but are being questioned by phone companies in their new video plans. For example, Cablevision has made service to every neighborhood in a community a key part of its local franchises. In New York and New Jersey, Verizon's fiber upgrade is focused on wealthier suburban areas but leaves rural and urban centers virtually untouched."

Consumers Union's Senior Director of Public Policy, Gene Kimmelman: "The need for greater competition in the monopolistic video marketplace is an urgent one -- but it has been urgent for ten years. We urge Congress to take the time to consider the many policy issues that must be addressed beyond the question of franchising if it seeks to spur true video competition and the consumer benefits that spring from it. These include mandatory build-out requirements or in lieu thereof, resources to meet the needs of underserved consumers; consumer protections and provider obligations to serve community needs; prohibitions on preempting municipal broadband systems; prohibitions on anticompetitive contractual channel bundling requirements that reduce consumer choice and prevent product differentiation; and a strong, enforceable prohibition on network discrimination."http://commerce.senate.gov/hearings/witnesslist.cfm?id=1700

See also