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Calif. Franchise Bill Would Let Cable Opt Out

A California proposal for state video franchising moves to the state Senate Appropriations Committee today (Aug. 14), with amendments that will allow incumbent cable operators to opt out of existing franchises in the face of a competitive overbuild.

California legislators have attempted to blunt some criticism by local governments by adding language that would let cities subject technology builds to review under environmental laws; and by certifying that local governments can set and enforce service standards. The former is important to cities because they are concerned about the placement of large powering vaults close to homes or in the public right-of-way.

The proposal, AB 2987, also requires state-licensed providers to pay a maximum of 1% of their gross revenues to support public, educational and government-access programming.

The new version would give AT&T Inc.’s U-verse TV product, which is Internet protocol-delivered, a deployment break. Language specifies that if an IP-delivered product penetrates 30% or less of the homes it passes within the first three years of deployment, then the provider can seek relief from buildout requirements demanding the product pass 40% to 50% of its service area within five years.

But AT&T Inc. and Verizon Communications Inc. would both be subjected to a modified rate freeze under the current proposal. Basic landline rate increases would be tied to the Consumer Price Index through 2009, to prevent the possibility of cross-subsidy.

The Public Utilities Commission would now authorize state franchising.

“This is a work in progress. It’s still not where it needs to be,” said Dennis Mangers, president of the California Cable & Telecommunications Association.

The association fears any added fees that will put terrestrial providers at a disadvantage to direct-broadcast satellite providers, who do not pay local taxes because they don’t have a local presence.

Meanwhile, in other states:

  • Telephone execs, testifying before the Pennsylvania state Senate Communications and High Technology Committee, argued that redundant, town-by-town negotiations are slowing down competition and raising the cost of doing business.
    William Petersen, president of Verizon Pennsylvania, said his company has negotiated only 22 franchises in the state in the last year. State authorization would streamline the process, he said.
    Incumbent operators countered that the marketplace is already competitive under the current regulatory regime. William Domurad, CEO of independent Clearview CATV of Southern York County, noted that 125 municipalities in the state already have cable competition.
    Incumbent operators are joined in their opposition by 180 cities, each of which has passed a resolution opposing the bill that would remove franchising power from local hands and place it under the Corporation Bureau of the Secretary of State.
  • Verizon Communications Inc. announced it is moving ahead with an investment totaling $1.5 billion in New Jersey. That will be spent over the next three years to construct its fiber optic network, now that Gov. Jon Corzine has signed a bill to set statewide franchising rules. The governor also issued an executive order regarding the bill, assigning Public Advocate Ron Chen to monitor the buildout to ensure that apartment residents and other multiple housing unit dwellers receive “appropriate coverage and service.”