Skip to main content

Bells’ Eye D.C. After Texas Defeat

The big Bell telephone companies are turning to Washington as their best hope for help getting into the TV business after Texas legislators killed a bid by SBC and Verizon to get a statewide cable franchise.

The two phone companies want to avoid the standard, but cumbersome, process of applying for a cable franchise in every city in America. They had hoped Texas would be the first of many statewide franchises, but Texas cable lobbyists convinced Lone Star state lawmakers that phone companies would abuse a statewide license by serving only higher-income communities and neglecting less-profitable poorer neighborhoods.

The Texas precedent reduces chances that other states will eliminate the need for local franchises.

The phone companies are now switching the focus to Plan B--asking Congress and the FCC to set a national policy for granting permits to companies that will bring broadband and pay-TV competition to cable.

Kyle McSlarrow, the cable industry’s man in Washington, is glad to see the battle moving from statehouses to Capitol Hill. “Any changes will have important implications for consumers, the FCC, states and municipalities,” he said. “It is not appropriate for any one state to unilaterally revise a federal statute with such broad implications in a piecemeal fashion in order merely to serve the business interests of one or two companies."

The Bell’s aim is to establish nationwide standards for franchise fees and service obligations that would apply to every market. The Bells say the policy would let them roll out competition quicker--advancing the broadband rollout is a government priority--by eliminating lengthy negotiations with local authorities.

But the cable industry isn’t going to give the phone companies any easier time winning a quick fix than Texas operators did. McSlarrow, who is president of the National Cable & Telecommunications Association, said any changes to Bells' franchising rights should be included as part of a broader review of regulations for all video service providers.