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FCC Promotes Cable TV Competition

December 20, 2006

The FCC today presented a report on cable TV competition. The figures (which were for the year 2004) showed that cable rates have gone up significantly. (No surprise there.) In areas where there was effective competition (another cable provider), rates were 17% lower than where that competition was lacking.

Of note is that the availability of satellite TV service does not seem to have any impact on what cable companies charge (I guess people are either cable or satellite oriented.)

In his remarks, Chairman Martin noted that since 1996, when Congress required that the FCC act to foster competition, rates for wireless service have dropped 80%. Long distance telephone service is now almost 40% cheaper. Cable TV rates, on the other hand, have risen 96%.

A big part of the problem is that [insert your own appropriate adjective] local governments are making it very difficult for new video providers to enter the market. In order to remedy this situation, the FCC today instituted new franchise rules that would facilitate the franchising application process.

The Order addresses several ways by which local franchising authorities are unreasonably refusing to award competitive franchises. These include drawn-out local negotiations with no time limits; unreasonable build-out requirements; unreasonable requests for "in-kind" payments that attempt to subvert the five percent cap on franchise fees; and unreasonable demands with respect to grants of free public, educational and government cable channels.

The rules are similar to those in the legislation that Congress failed to pass earlier this year (the mother-of-all-bills). That bill would have established a national franchising system (favored by the likes of AT&T and Verizon which have been building out video services but encountering local application delays that often stretched out over a year).

Unlike the failed national franchising rules, today's FCC rules apply to local franchise agreements, which means the big telcos must still process through the tens of thousands of local authorities.

Some states are setting up state franchising systems, however.

Michigan was the most recent to pass such a law. It offers a standard 10-year franchising agreement to new entrants who cannot reach agreement with a locality within 30 days.

If this trend continues, cable companies should get some real competition and your cable bills should drop (or at least not go up so fast).

In another FCC development, the newest FCC Commissioner (out of five) has withdrawn from the AT&T /BellSouth merger decision (due to conflict of interest problems), leaving the Commission split 2-2 on the question. Word has it that the merger application is expected to hang in the wind a while longer.