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Missouri Measure Has No VoIP Solution

The Missouri state Senate approved a cable franchise reform bill lacking language sought by the cable industry that would specify voice-over-Internet Protocol service is not subject to state regulation.

That provision could have stopped an ongoing dispute between the state Public Service Commission and Comcast over that company's phone product.

The measure was approved by a unanimous vote of the senators present on Feb. 20. The bill, as currently proposed, would assign cable franchising authority to the PSC, which would have 30 days to issue a franchise.


The bill has moderate build-out demands. A new provider would have to reach 25% of the state's households within three years and at least 30% within 6 years. A provider can use “alternative technologies” to reach these thresholds, according to the bill.

Greg Harrison, president of the Missouri Cable Telecommunications Association, said the bill is “180 degrees better” than a proposal floated last year, which would have provided expedited franchising to newcomers but would have held incumbents to their current contracts. This year's iteration lets incumbents file for state franchises, too.

But incumbent operators believe at least three other issues need to be addressed in the bill including the regulatory exemption for VoIP services.

The Missouri PSC has taken the position that cable-delivered VoIP is different from other similar phone services such as that of Vonage Holdings. Calls via Vonage technology can be made anywhere the hardware is located. Cable's product has a fixed initiation point. State regulators say that difference means Comcast's VoIP product, already available in Missouri, needs a certificate of service authority like the state's other telephony providers.

Comcast unsuccessfully disputed the commission's stance in court. In January, judge Nanette Laughrey of the U.S. District Court for the Western District of Missouri said Federal Communications Commission rulings have not specified that all VoIP products are defined as information services. That leaves open the possibility for states to regulate some products, she ruled.

A ban on state regulation in the franchise reform bill could settle the issue for all potential cable VoIP providers.

Harrison noted there is a difference of opinion among attorneys in the state whether the Missouri has the constitutional authority to abrogate local franchise agreements.

Should the legislature's authority be successfully challenged in court, incumbents don't want to be forced back into more than 500 local agreements, while new providers operate under a light regulatory burden, Harrison said.

Cable operators also want language in the bill that would compel cable and satellite customers to pay the same amount of state fees for service. Satellite companies argue that such provisions are unfair because cable fees are for the use of local infrastructure by terrestrial operators. Satellite providers also pay federal fees and taxes that are not applied to cable, the companies argue.

Incumbents want all of their concerns addressed in a final version of the bill, Harrison said. The House is not expected to take up the bill until March.


Meanwhile, a reform bill has also been introduced in Tennessee. The proposal there would assign regulatory authority to the office of the secretary of state. State officials would have 10 days to act on a franchising request.

The proposal would allow an incumbent operator to apply for state franchising oversight in place of a local agreement as soon as one or more households were served by a new provider. Wireline providers in communities where there is already more than one terrestrial provider could apply for state oversight as soon as the bill is passed.

No build-out requirements could be applied to new providers. The bill states new video providers may not refuse service based on the economics of an area and allows lawsuits based on allegations of redlining.