February 15, 2006 4:15 PM PST

Telecoms, cable firms take franchise fight to D.C.

Phone companies and cable operators have taken their fight over video franchising to Washington, D.C.

On Wednesday, executives on both sides of the debate testified in front of the Senate Commerce Committee to explain their positions on changing the current rules, which require video service providers to negotiate franchise agreements with local communities.

The hearing was part of a larger effort in Congress to look into the possibility of reforming the 1996 Telecommunications Act.

Verizon Communications Chief Executive Ivan Seidenberg and AT&T CEO Ed Whitacre tried to encourage lawmakers to pass legislation that would allow phone companies to bypass local communities so they can roll out service more quickly. Meanwhile, Cablevision CEO Tom Rutledge tried to convince lawmakers that taking control away from local authorities to grant franchise agreements would be a mistake.

The stakes in this debate are high, as cable operators and phone companies increasingly compete in each other's businesses. Several cable operators have already added phone service to their service bundles, including Time Warner Cable, which recently reported it has signed up more than a million customers so far.

Meanwhile, Verizon and AT&T are spending billions of dollars to upgrade their networks to deliver superfast Internet access and television service. But rolling out TV service has been slow, in large part owing to the long process of negotiating franchise agreements, said Verizon's Seidenberg.

"We have been working diligently, town by town, to play by the existing rules and obtain franchises on the local level," he said. "However, as we multiply these efforts across the country, this process, quite simply, takes too long, is too expensive and--ultimately--is too big an impediment to investment and competition."

Verizon has already reached more than 3 million homes with its fiber network in 18 states, but it has only begun offering TV service, in just a few communities in six states: Texas, New York, California, Massachusetts, Florida and Virginia.

Where Verizon's service, called Fios TV, is offered, many customers have signed up, abandoning their cable providers, Seidenberg said. But even those who don't choose Fios TV are still benefiting, because cable operators have cut prices between 28 percent and 42 percent, he claimed.

Cable companies argue that changing the laws to grant blanket franchises gives telephone companies an unfair advantage, because cable companies have spent years negotiating contracts with each individual town or city. Cablevision's Rutledge told the committee that Verizon and AT&T are simply trying to skirt the process. He said they have had plenty of time to negotiate contracts but have instead chosen to drag their feet and try to change the laws in their favor.

"Verizon has been building these networks and planning them for over three years, and yet didn't ask for the franchises," he said. "Now they have 3 million passings built and didn't get, or hardly got, any franchises in that period of time. In the same period of time we, a much smaller company, were able to get 100 of them. So I think the problem is that you have people who are not participating in the franchise process."

Two members of the Senate Commerce Committee, Conrad Burns (R-Mont.) and Co-Chairman Daniel Inouye (D-Hawaii), have already indicated their support to streamline the video franchising process. But the senators have said the laws can be changed only if cable is put on the same footing as new entrants, such as the phone companies. They also have said that state and local governments should not be stripped of their authority.

Most likely the battle over video franchising will be decided in statehouses as opposed to on Capitol Hill. Last year, Texas became the first state to pass a law granting statewide video franchises. Momentum for similar legislation is building in other states such as Virginia, Indiana, Kansas, Missouri, South Carolina and New Jersey.

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14 comments

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Capitalistic competition!
I'm sick of all these Monopololies and companies that are so greedy. all these companies look at is what they can TAKE from us, not what they can contribute. If I had my way America would be one big public owned community with no room for capitalunnism. makes me sick!! I dont send my money to these corps if I can help it. Materialism Sucks
Posted by infobama (11 comments )
Reply Link Flag
Maybe you should leave....
Capitalism is the driving force of why we one of the greatest nations. Not only do we promote liberty and freedom, but along with those is free enterprise. This also comes at a sharp cost. While these big companies fight over which areas should be theirs and how fast they can get into these areas should be, in no way, a reason to badmouth capitalism. If you like, you can go to China or Korea where the government decides what company will be where, how they will operate, what prices to charge, and what services to offer. I myself am a small business owner, I had the freedom to start up my business, as long as I played fair with the business rules and regulations. If you don't like where you live, then leave. That's all I have to say.
Posted by smcgui5 (21 comments )
Link Flag
Capitalistic competition!
I'm sick of all these Monopololies and companies that are so greedy. all these companies look at is what they can TAKE from us, not what they can contribute. If I had my way America would be one big public owned community with no room for capitalunnism. makes me sick!! I dont send my money to these corps if I can help it. Materialism Sucks
Posted by infobama (11 comments )
Reply Link Flag
Maybe you should leave....
Capitalism is the driving force of why we one of the greatest nations. Not only do we promote liberty and freedom, but along with those is free enterprise. This also comes at a sharp cost. While these big companies fight over which areas should be theirs and how fast they can get into these areas should be, in no way, a reason to badmouth capitalism. If you like, you can go to China or Korea where the government decides what company will be where, how they will operate, what prices to charge, and what services to offer. I myself am a small business owner, I had the freedom to start up my business, as long as I played fair with the business rules and regulations. If you don't like where you live, then leave. That's all I have to say.
Posted by smcgui5 (21 comments )
Link Flag
Franchise Contracts = Monopolistic Practices
Open up the competition ASAP. Separate the Services from the physical media. Multiple services providers should have access to the media and the set top box. No services provider should be excluded.

History shows prices go down with competition: phone rates, air fares, etc.
Posted by (31 comments )
Reply Link Flag
Franchise Contracts = Monopolistic Practices
Open up the competition ASAP. Separate the Services from the physical media. Multiple services providers should have access to the media and the set top box. No services provider should be excluded.

History shows prices go down with competition: phone rates, air fares, etc.
Posted by (31 comments )
Reply Link Flag
Why should Phone Companies get special treatment
Why should the phone companies be given special treatment?? If they want to be a media provider- than they should be to play by the same rules that cable providers have had to play by for years. By mainstreaming the francising rules it will take away money from the townships- not to mention- do you think they went into Asbury Park to ask for francise? no they went to Long Island where the pockets are deep. Don't be fooled by the phone companies that for years upon years have been ripping off the American public!!! They want to be pushy line cutters!!! Well, back of the line baby- take a number like the rest of us!!!!!
Posted by (2 comments )
Reply Link Flag
Frat Boys, Hazing, and a Level Playing Field
The cable guys' basic argument is "Hey, we had to
schmooz all of those local politicians. We had
to put up with local access. We had to give free
equipment to the schools, and, yeah, some of
these places made us hire some guy's wife in a
no-show job. We put up with all of that cr*p
because that's what you have to do to get a
local franchise. If the phone guys think that
they're going to get a free ride on this, then
they have another think coming."

While I'm not a big fan of the cable guys, they
are right on this one. The phone companies were
arrogant, and built out their video network with
the _assumption_ that they would get special
treatment.

The unfortunate thing is that the consumer is
getting hurt by all of this. Instead of
competition based on providing good service,
we have competition based on who has the best
lobbyists and lawyers. Not good.

Meanwhile, the phone guys are thinking up ways
to erect toll booths on the infobahn. They are
being stupid. Common carrier status provides
them with important legal protections. As soon
as they move towards a monopoly ISP business
model, they are exposed to all kinds of liability.
Posted by (139 comments )
Link Flag
Frat Boys, Hazing, and a Level Playing Field
The cable guys' basic argument is "Hey, we had to
schmooz all of those local politicians. We had
to put up with local access. We had to give free
equipment to the schools, and, yeah, some of
these places made us hire some guy's wife in a
no-show job. We put up with all of that cr*p
because that's what you have to do to get a
local franchise. If the phone guys think that
they're going to get a free ride on this, then
they have another think coming."

While I'm not a big fan of the cable guys, they
are right on this one. The phone companies were
arrogant, and built out their video network with
the _assumption_ that they would get special
treatment.

The unfortunate thing is that the consumer is
getting hurt by all of this. Instead of
competition based on providing good service,
we have competition based on who has the best
lobbyists and lawyers. Not good.

Meanwhile, the phone guys are thinking up ways
to erect toll booths on the infobahn. They are
being stupid. Common carrier status provides
them with important legal protections. As soon
as they move towards a monopoly ISP business
model, they are exposed to all kinds of liability.
Posted by (139 comments )
Link Flag
Frat Boys, Hazing, and a Level Playing Field
The cable guys' basic argument is "Hey, we had to
schmooze all of those local politicians. We had
to put up with local access. We had to give free
equipment to the schools, and, yeah, some of
these places made us hire some guy's wife in a
no-show job. We put up with all of that cr*p
because that's what you have to do to get a
local franchise. If the phone guys think that
they're going to get a free ride on this, then
they have another think coming."

While I'm not a big fan of the cable guys, they
are right on this one. The phone companies were
arrogant, and built out their video network with
the _assumption_ that they would get special
treatment.

The unfortunate thing is that the consumer is
getting hurt by all of this. Instead of
competition based on providing good service,
we have competition based on who has the best
lobbyists and lawyers. Not good.

Meanwhile, the phone guys are thinking up ways
to erect toll booths on the Infobahn. They are
being stupid. Common carrier status provides
them with important legal protections. As soon
as they move towards a monopoly ISP business
model, they are exposed to all kinds of liability.
Posted by (139 comments )
Link Flag
Why should Phone Companies get special treatment
Why should the phone companies be given special treatment?? If they want to be a media provider- than they should be to play by the same rules that cable providers have had to play by for years. By mainstreaming the francising rules it will take away money from the townships- not to mention- do you think they went into Asbury Park to ask for francise? no they went to Long Island where the pockets are deep. Don't be fooled by the phone companies that for years upon years have been ripping off the American public!!! They want to be pushy line cutters!!! Well, back of the line baby- take a number like the rest of us!!!!!
Posted by (2 comments )
Reply Link Flag
Frat Boys, Hazing, and a Level Playing Field
The cable guys' basic argument is "Hey, we had to
schmooz all of those local politicians. We had
to put up with local access. We had to give free
equipment to the schools, and, yeah, some of
these places made us hire some guy's wife in a
no-show job. We put up with all of that cr*p
because that's what you have to do to get a
local franchise. If the phone guys think that
they're going to get a free ride on this, then
they have another think coming."

While I'm not a big fan of the cable guys, they
are right on this one. The phone companies were
arrogant, and built out their video network with
the _assumption_ that they would get special
treatment.

The unfortunate thing is that the consumer is
getting hurt by all of this. Instead of
competition based on providing good service,
we have competition based on who has the best
lobbyists and lawyers. Not good.

Meanwhile, the phone guys are thinking up ways
to erect toll booths on the infobahn. They are
being stupid. Common carrier status provides
them with important legal protections. As soon
as they move towards a monopoly ISP business
model, they are exposed to all kinds of liability.
Posted by (139 comments )
Link Flag
Frat Boys, Hazing, and a Level Playing Field
The cable guys' basic argument is "Hey, we had to
schmooz all of those local politicians. We had
to put up with local access. We had to give free
equipment to the schools, and, yeah, some of
these places made us hire some guy's wife in a
no-show job. We put up with all of that cr*p
because that's what you have to do to get a
local franchise. If the phone guys think that
they're going to get a free ride on this, then
they have another think coming."

While I'm not a big fan of the cable guys, they
are right on this one. The phone companies were
arrogant, and built out their video network with
the _assumption_ that they would get special
treatment.

The unfortunate thing is that the consumer is
getting hurt by all of this. Instead of
competition based on providing good service,
we have competition based on who has the best
lobbyists and lawyers. Not good.

Meanwhile, the phone guys are thinking up ways
to erect toll booths on the infobahn. They are
being stupid. Common carrier status provides
them with important legal protections. As soon
as they move towards a monopoly ISP business
model, they are exposed to all kinds of liability.
Posted by (139 comments )
Link Flag
Frat Boys, Hazing, and a Level Playing Field
The cable guys' basic argument is "Hey, we had to
schmooze all of those local politicians. We had
to put up with local access. We had to give free
equipment to the schools, and, yeah, some of
these places made us hire some guy's wife in a
no-show job. We put up with all of that cr*p
because that's what you have to do to get a
local franchise. If the phone guys think that
they're going to get a free ride on this, then
they have another think coming."

While I'm not a big fan of the cable guys, they
are right on this one. The phone companies were
arrogant, and built out their video network with
the _assumption_ that they would get special
treatment.

The unfortunate thing is that the consumer is
getting hurt by all of this. Instead of
competition based on providing good service,
we have competition based on who has the best
lobbyists and lawyers. Not good.

Meanwhile, the phone guys are thinking up ways
to erect toll booths on the Infobahn. They are
being stupid. Common carrier status provides
them with important legal protections. As soon
as they move towards a monopoly ISP business
model, they are exposed to all kinds of liability.
Posted by (139 comments )
Link Flag
 

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