July 15, 2005 12:33 PM PDT

Texas TV franchise bill not dead

A bill in Texas that would allow phone companies to offer television service without negotiating contracts with local governments isn't dead after all.

Earlier this week, the Texas state Senate passed a bill during an emergency legislative session that will grant new entrants, namely phone companies, statewide franchises to offer TV service. If SB 21 becomes law, it will allow phone companies to enter the television market without having to negotiate separate contracts with each municipality in the state, as cable companies have long been required to do.

A similar bill, which passed the Texas House of Representatives earlier this spring, died during a regular legislative session in May in the state Senate. It was revived in an emergency session, which was called by the state governor.

Unlike the original House bill, the new Senate bill creates a statewide franchise, while requiring new entrants such as Verizon Communications and SBC Communications to adhere to many of the same terms that cable companies already have in their contracts with cities.

The Senate bill also includes a provision that prohibits service providers from discriminating which neighborhoods or communities they serve based on income. The new measure keeps much of the control over the rights of way in the hands of the cities, whereas the previous House bill did not.

At least one group that had been vehemently opposed to the original House bill said it is encouraged by the Senate bill.

"This new bill is a whole bunch different from the previous one," said Frank Sturzl, the executive director of the Texas Municipal League. "The fact is that a lot of city officials we talk to think competition is good. There's also a general recognition that something will be done on this franchise issue either in our own state government or in Washington. Our best approach is to get a good bill in the state."

The phone companies say they support the new legislation, but they don't seem as enthusiastic as they were for the previous bill.

"We view this bill as solidly pro-consumer," said Bob Elek, a spokesman for Verizon. "It's not as aggressive as the previous bill, but it's acceptable to us. It's a step in the right direction--and hopefully it keeps moving in that direction."

Legislators are working under a tight deadline, as the emergency session is set to end Wednesday at midnight.

Verizon and SBC, which are upgrading their networks to handle television service, view statewide TV franchises as a key aspect of their strategy to roll out TV service within the year. Changes to franchise laws would help streamline the process, drastically reducing the time it would take to offer new service in a particular community.

Cable companies argue that such laws granting blanket franchises would give telephone companies an unfair advantage, because cable companies have traditionally been expected to negotiate contracts with local municipalities.

"We still don't think this new bill provides a level playing field," said David Grabert, a spokesman for Cox Communications. "New entrants do not have the same obligations as the cable companies, and we don't think that is fair."

The outcome of the Texas legislation is being closely watched by lawmakers in other states, such as New Jersey and California, who are also considering changes to their public utilities laws.

 

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