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Cable Does About-Face in Calif.

California cable operators will now support a video franchising-reform bill that has been amended to allow incumbents to opt into state regulation when a competitive provider gives 10 days notice that it intends to launch video service in a locality.

The amended bill, AB2987, was approved on a 9-0 bipartisan vote on June 29 by the state Senate Energy, Utilities and Communications Committee.

“We feel much more optimistic. Our strategy of working with the speaker [Fabian Nunez, D-Los Angeles] to offer opt-in as an author’s amendment was adopted,” said Dennis Mangers, president of the California Cable & Telecommunications Association after the vote.

Incumbent cable operators were also critical of language in the buildout provision that they contended would allow a competitor to satisfy the state’s goals by providing a lower-technology bundle of digital-subscriber line service, plus direct-broadcast satellite service, rather than, for instance, the fiber-to-the-home FiOS TV service planned by Verizon Communications Inc.

The bill currently requires that Verizon deliver video service to 25% of its homes passed within two years, increasing to 40% of its footprint in five years.

A timeline for AT&T Inc., which intends to deliver services over existing Internet Protocol infrastructure, is quicker. AT&T must reach 35% of its homes passed in two years, and 40% within five years.

In each instance, 25% of the homes reached must be low-income, defined by the bill as households earning less than $35,000 annually.

But the bill was amended to specify that repackaged DSL and satellite services would not satisfy buildout rules.

Cable’s about-face leaves local governments as the most powerful opponents of the bill. Attorneys for the League of California Cities and the California State Association of Counties questioned whether the state constitution allows the legislature to undo local contracts, and the groups predicted that a lawsuit would ensue should a cable company attempt to take advantage of new provisions.

Those groups also are concerned that language will be added to the bill that will give new competitors an “out” from build-out requirements, in the event of an economic downturn or “Act of God.” Local governments want it clear that “poor management decisions” will not allow a new competitor to trim its buildout.

Negotiations on further amendments will continue throughout July, but the bill is not scheduled to be heard again until August.

PENNSYLVANIA PUSH

In Pennsylvania, legislators have introduced bills in both houses of the General Assembly that would enable state franchising for new video competitors.

The bills retain local governments’ authority to hear and mediate complaints about cable providers. Local governments will also continue to collect a cable franchise fee of 5% of gross revenue, but may levy no other taxes. Channel requirements for public, educational and government channels are also preserved, with up to three channels earmarked for large cities.