Virginia Fast-Tracks Video Franchising

Virginia Governor Tim Kaine has signed a bill that eases the way for Verizon and other new multichannel video entrants to compete with cable operators in the state.

The new bill, which becomes effective July 1.

The Virginia franchises remain under the control of the municipalities, according to Verizon spokesman Harry Mitchell, which distinguishes the Virginia law from a statewide franchise bill that passed in Texas earlier this year

Verizon had pushed for a statewide franchise in virginia, too, but was foreclosed that route by the state's constitution, which establishes municipalities' control over their rights of way.

Instead, in a sort of must-carry take on the franchise process, new video entrants can opt for either a standard franchise process, or after 45 days of negotiations without a deal, officially opt for a so-called "ordinance" franchise.

So long as the video service provider agrees to the terms of that franchise, which include service build-out requirements as well as fee and channel commitments similar to incumbent cable operators, the new provider may begin offering video service within 75 days and the municipality must accommodate it.

Verizon still thinks the build-out requirements-100% of a pre-established coverage area within three years, for instance--are a barrier to entry.

Kyle McSlarrow, president of the National Cable & Telecommunications Association, was all for Virginia's conditional variation on the video franchise streamlining theme.

 "We congratulate Virginia legislators and the Governor for enacting a law that streamlines government regulation of video franchising while providing an opportunity for all providers to compete fairly," he said in a statement.  "Virginia has set the bar for federal and state legislators as they too ponder changes in telecommunications law to ensure fair and robust competition and create a more dynamic telecommunications marketplace."
Verizon gets a faster track to entry, and essentially a guaranteed franchise wherever it agrees to
requirements for access and service provision, franchise fees, and customer service as set forth in the bill. “This legislation will produce tangible benefits for Virginians, who will have more choices for their video services,” said Verizon Virginia President Robert Woltz Jr.

Verizon also got a three-year out clause. That means that if it finds after three years it cannot make a business out of the franchise, it can get out of the deal--a provision it has gotten in most other markets. But there is a compromise there, too.

If it does exit, it cannot re-enter for the balance of the unexpired franchise, which would be a dozen years in most cases.

Verizon, the most aggressive telco video provider to date, has also launched a franchise in the Virginia suburb of Herndon, Va., having secured a franchise to overbuild the market last July. Cox has the cable franchise there.

FiOS expanded its Virginia presence with a franchise deal with Fairfax County, the suburb that surrounds the separately incorporated Herndon.

It could get an even bigger boost if a House Commerce Commitee national video franchising bill being hammered out last week makes it into law.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.