Telecom and Cable Franchising Policy Reform

The Senate Energy, Utilities and Communications Committee Hearing on Tuesday, March 15th 2005 (9am State Capitol, 9:30a, Room 112) is really a workshop on telecom policy. Lori Panzino, Rich Esposto and Bill Lowery are speaking for local governments.

• Lori for her broad view and County perspective.
• Rich because Sacramento has considerable experience in awarding multiple cable licenses.
• Bill to discuss how PEG parity can be accommodated among franchisees.

These comments are supported by LCC and SCAN-NATOA. Approvals to speak for CSAC are pending.

In the next few weeks there will be an Assembly hearing on AB 903 (De La Torre). Local governments should express concern as outlined in #1 below but not take official positions until the promised amendments from the California Cable Television Association (CCTA) are known. Points 2 and 3 are to educate elected officials about the larger telecom reform picture.

1. To begin, Local Governments Support Telecommunications Competition. We believe that the benefits of competition, especially that which brings broadband choice to homes and businesses is important to California’s future. Cable TV is the revenue generating anchor service for deploying new infrastructure.
   
   Next, current statute imposes more regulatory burden than is reasonable or necessary. To stimulate competition the entire 53066.3 could be eliminated with no adverse impact on local governments and it would put the marketplace at the forefront of finding the level playing field instead of a list of artificial factors to consider. We don't support burdensome, even carefully crafted, language that protects the cable incumbents.
   
   One of the established public policies is to prevent discrimination in delivery of cable service.* The current requirement that cable television competitors build an entire city or the CCTA white paper position requiring construction in a telephone companies’ entire service area is a worthwhile and an important goal, however it should not be the starting point for allowing competition. The ‘build it all’ tale is an illogical attempt by the cable industry to extend the intent of the non-discrimination provisions and keep competitors away.
   
   Rather, the better public policy is to ensure that the provisions of Federal and State law are followed and no service provider discriminates. Competitors are then free to build and activate service where it wants on a balanced basis. Local governments currently monitor non-discrimination by providers and competitors and we believe that a simple, workable system could be developed to monitor non-discrimination on a service area or even regional basis.
   
   Moreover, monitoring economic non-discrimination should not be a problem for telecommunications competitors because the current data show that the higher income earners already have their broadband services.
   
   Source: Pew Research as reported in “Telephony”, February 14, 2005.
   
   Each locality has different needs and different existing franchises and determining PEG parity of new providers is a local task. Incumbents have certain advantages, competitors have certain advantages. Local governments, in open public processes, are entirely capable of determining what parity is between providers relative to the PEG considerations in awarding a second franchise.
    
2. Those that assert that the electronic method of video delivery triggers regulatory exemption are wrong. Whether delivered on coax, bits on a fiber or a wax string, Cable TV is Cable TV. Title VI of the Act says so. The Congress, Legislature, FCC, Courts and our mutual constituents should expect to hear from local governments quickly and loudly if one industry segment tries an end-run around the rest to deliver cable TV.
    
3. Regulatory and Compensation Reform is Past Due. We hail any opportunity to engage in a broad-based dialogue with all telecommunications industry segments including those that deliver their services without using the public-right-of-way to develop a balanced, neutral regulatory and compensation model for California.

*SEC. 621. [47 U.S.C. 541] (a)(3) In awarding a franchise or franchises, a franchising authority shall assure that access to cable service is not denied to any group of potential residential cable subscribers because of the income of the residents of the local area in which such group resides.