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Chris Llana, Editor


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House Committee Considers Bill to Promote TelCo TV Services

March 31, 2006 - updated 4/1/06

A Congressional committee held a hearing yesterday to consider a draft bill that would make it easier for telephone companies to provide national television services. Such services would compete directly with cable TV, and would be offered over telephone companies' ever-expanding fiber-optic networks, along with broadband data services.

The House Telecommunications and the Internet subcommittee held the hearing -- "Communications Opportunity, Promotion, and Enhancement Act of 2006." The subcommittee is part of Joe Barton's Energy and Commerce Committee.

Telephone companies have launched TV services in different parts of the country, but breaking into the local cable-TV franchise mold has been cumbersome, and some local governments having vested interests in their income-producing cable-TV franchise have been throwing up roadblocks.

The draft legislation would establish a national franchising system which would preempt local autonomy, while preserving local government's cut of the revenues. The FCC would establish rules protecting consumers' interests.

The stated goal of all of this is to foster competition, thereby increasing choice and lowering prices for consumers, and facilitating other advanced broadband services. Sounds good to me.

There may (cough, cough) also be some major telco lobbying behind all of this. The draft legislation has got the cable industry's full attention, as could be expected. They have been mounting a full court press to preserve their empire.

I was unable to watch the webcast of the hearing due to employment constraints, but I'll update as I learn more.

In the meantime, here is Joe Barton's opening remarks at the hearing, and here is the committee print of the unnumbered draft bill.

4/1/06 UPDATE

The archive of the hearing webcast became available late Friday; I have now listened to all 5.5 hours. Believe me, there is a lot of work left to do before the bill reaches final form. The subcommittee will markup (debate and make amendments to) the bill next week (by April 7) and the full Energy and Commerce Committee will work it over after their Easter break.

The bill deals with other issues besides providing a national regime for telephone company provision of TV services. It also would impact on broadband data services, as well as voice over internet protocol (VoIP) services (including provision for VOIP 911/emergency calls).

Several issues proved most contentious:

The bill in its current form would allow telco TV service providers who get a national franchise to establish that service in select neighborhoods, presumably in those areas expected to produce the highest returns for the investment. Meanwhile, the incumbent cable provider with the local franchise was required to provide service to all neighborhoods in its franchise area at the same price. The cable provider, once a national franchisee has moved into its service area, would then be eligible to apply for its own national franchise. This would presumably free it from uniform pricing obligations under the bill as written. The cable company would lower its prices in those areas where it faced telco competition, and could raise prices in those low-margin neighborhoods where there is no competition in order to compensate for the lower rates elsewhere.

That, at least, is what the opponents to the current language are saying. They want rate uniformity and a requirement for national franchisees to buildout their new services to match the area covered by the incumbent cable provider.

On the other hand, some telephone companies would like to provide TV service to customers in their existing service area and no further. So what if their service area overlaps the competing cable franchise area by just a little? Should the telco be required to build out its network to duplicate the cable company's coverage?

Another big issue was how to achieve (inter)"net neutrality," although they could not agree on exactly what that means. The aim is to prevent the companies who control internet access (the wires, the pipes) from controlling consumer access to internet content (thereby inhibiting innovation and stifling new content providers). The cable and telco people say by offering faster/better access to customers who pay a premium, they are not shutting out the masses from internet content.

Others claimed that giving priority to those who pay extra by necessity hurts everyone else, because of the limited capacity/bandwidth inherent in the internet.

We should have a better picture of what the final legislation will be by the end of April.

To access the hearing webcast, to see a list of witnesses, or to link to copies of their written opening statements, go to this page.