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Video Franchise Gains Steam in DC

Light Reading
News Analysis
Light Reading

The idea of a national video franchise got another push this week, Light Reading has learned. Sources in Washington say a House floor vote on Rep. Joe Barton’s national video franchise legislation is already being planned, a strong sign of the bill's momentum.

Barton’s bill, called the Communications Opportunity, Promotion, and Enhancement Act of 2006 (COPE), will be marked up and voted on in full committee next week, probably Wednesday. The bill passed the House Subcommittee on Telecommunications and the Internet by a margin of 24-7 April 5. (See House Continues to Move on Video Franchise Reform and Barton Bill to Boost Telco Video.)

”The overwhelming bipartisan vote in the House subcommittee is a clear sign that Congress is eager to eliminate the barriers to video competition that have resulted in higher prices for consumers,” AT&T Inc. (NYSE: T) spokesman Mike Balmoris writes in an email to Light Reading Friday.

Notably, revisions to the bill that would have strengthened its net neutrality language were defeated by a vote of 23-8. Today, the Barton bill simply restates some broad net neutrality rules issued by the FCC last summer and provides very little enforcement teeth.

If the House Commerce committee makes quick work of passing the COPE bill next week, it could reach the floor of the House for a vote in the second week of May, sources say.

“On the floor, it will probably pass by a fairly wide margin, creating some momentum for Senate action,” say Sanford Washington Research Group analysts Paul Glenchur and Paul Gallant in a policy bulletin released this week. “We think the chances for ultimate enactment of franchise relief legislation in 2006 are now approaching 50 percent."

The creation of a national video franchise would be a big break for telcos, which are now just beginning their push into the video business. Such a franchise would relieve telcos of the hassle and cost of obtaining local video franchises on a city-by-city basis. And it would allow them to pick and choose where they want to deploy video services, without having to haggle with local politicians.

That process is nothing strange to the cable industry, whose companies have been signing local video franchises for years. The cable guys naturally don’t like the idea of their telco rivals bypassing all that work with a national video franchise while cable companies remain beholden to their existing contracts.

The cable industry has been the staunchest opponent of the Barton bill and has succeeded in removing some telco-friendly video pricing language from the current draft of the bill.

The cable industry’s representation in Washington, the National Cable & Telecommunications Association (NCTA) , has yet to take a hard and fast position on the issue -- at least not publicly.

“Our approach so far has been one of pragmatism and acknowledging that there is strong sentiment for a national video franchise,” says NCTA spokesman Rob Stoddard. “We haven’t yet fully weighed in. It’s a matter of seeing what the various committees do with it before it reaches the floor.”

The NCTA has said publicly it might support a national video franchise law if it applied equally to telco and cable players.

A source close to the telco lobby says the cable industry doesn’t believe it can garner enough votes on the House side to derail passage of a national video franchise. So the cable crowd is now focusing its lobbying efforts on the Senate, the source says.

In order for a video franchise to become a reality, the Senate must pass its own version of a franchise law. If that happens, the House and Senate bills would be hammered into one bill by a joint conference committee before being sent to the President’s desk. That said, new telecom law containing a national video franchise law faces a wholly different set of obstacles on the Senate side. (See Senate Commerce Committee Holds Hearing on Video Franchising.) Sources say the Commerce Committee is close to completing such a bill, and that it could see committee and floor action in May. But the primary thrust behind the bill in the Senate comes from a desire to rewrite Universal Service Fund law, sources say. The video franchise, at least for now, is a secondary issue. The Senate’s bill may also roll in other pieces of legislation imposing more binding network neutrality rules on both telco and cable broadband providers. (See Net Neutrality Debate Wydens.)

— Mark Sullivan, Reporter, Light Reading

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User Rank: Light Beer
12/5/2012 | 3:56:21 AM
re: Video Franchise Gains Steam in DC
Clearly the Bush admin has been bought, hook line and sinker, by the telcos. Perhaps the senate will dispense with the requirement for universal service, while keeping the fees intact. No wonder GOOG is spending $2B/y on "data centers, networking equipment and servers" for an expected high return. They will just bypass the whole mess.
User Rank: Light Beer
12/5/2012 | 3:56:19 AM
re: Video Franchise Gains Steam in DC
* Where Verizon Fios rolled out, cable MSO's magically lowered their prices in those areas from 15% to 25%. So MSO's have margin.

* With VOIP, Telco's are getting pinched on price. So phone has margin to lower price.

Lower prices, more features, bandwidth and service. Thank you, may I have another sir.

As long as the politicans are not getting paid off that results in raising prices, I am all for it.
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