The FCC by a 3-2 vote adopted rules Dec. 20 to streamline the cable franchising process by prohibiting county and municipal franchising authorities from refusing to grant competitive franchises and creating a 90-day “shot clock” for granting a new franchise.
The rules are intended in prevent local franchising authorities (LFA) from becoming a barrier to the entry of new multichannel video service providers to their cities and counties. Telecommunications companies like Verizon and AT&T, which are rolling out multichannel video via IPTV product offerings, have sought changes to the existing franchising system.
The majority of commissioners agreed that some LFAs are being unreasonable in awarding competitive franchises by:
- drawing out local negotiations with no time limit;
- imposing unreasonable build-out requirements;
- making unreasonable requests for “in-kind” payments “to subvert” the 5 percent cap on franchise fees; and
- making unreasonable demands regarding public, educational and government access (PEG) channels.
The FCC action is intended to promote greater competition with cable and accelerate the deployment of broadband Internet service nationally. In the view of the FCC chairman Kevin Martin, wider broadband deployment is tied to video. Commenting on the vote, Martin said rapid deployment of broadband “is intrinsically linked to the ability to offer video to consumers.” Building out modern telecommunication facilities is expensive, and once these networks are completed, companies can deploy voice, data and video services. “As a consequence, the ability to offer video offers the promise of an additional revenue stream from which deployment costs can be recovered.”
Commissioners Jonathan Adelstein and Michael Copps voted against the new rules. While agreeing that competition is important, both questioned the legal authority of the commission to take such action. The commission’s action “ignores the plain reading of Section 621(a)(1), which provides, in pertinent part, that a franchising authority ‘may not unreasonably refuse to award an addition competitive franchise,” Adelstein said. “On its face, Section 621(a)(1) does not impose any time limitation on an LFA’s authority to consider, award or deny a competitive franchise.”
Adelstein identified six areas “that raise serious legal questions requiring careful scrutiny,” including:
- imposing a 90-day shot clock for new entrants with existing rights of way;
- requiring granting a new entrant’s franchise over 90 days;
- limiting build-out obligations of the new entrant;
- authorizing the new entrant to withhold payment of fees it deems exceed the 5 percent cap;
- undermining PEG and INET support; and
- authorizing new entrants to refrain from getting a franchise when upgrading mixed-use facilities to be used for video delivery.
However, commissioner Deborah Taylor Tate said Congress has “explicitly limited the authority of LFAs.” In adopting the new rules, the commission did not overstep its jurisdictional authority to interpret the Communications Act, she said.
“It is nonsensical to contend that, despite the limitation on LFA authority in the Act, LFAs remain the sole arbiters of whether their actions in the franchise approval process are reasonable,” she said.
Adelstein disagreed in his comments, contending the commission’s actions “turn federalism on its head by putting the commission in the role of sole arbiter.”
The FCC also adopted a Further Notice of Proposed Rulemaking seeking comments on how its new rules should affect existing franchisees. The commission has tentatively concluded that the new rules should apply to existing franchise holders at the time their franchise is renewed.
For more information, visit: www.fcc.gov.
