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Policy

California Franchise Debate Coming

5/26/2006 8:00 PM Eastern

Backers of a statewide video-franchise reform bill in California have until June 2 to iron out amendments in order to meet the chamber’s deadline for floor debate on new bills.

The bill’s language is still in flux, though, and the measure will inevitably be compared to a proposal on the issue approved in New Jersey last week (May 22). There, reform proponent Verizon Communications Inc. will be held to a partial buildout standard.

If Verizon seeks a New Jersey-wide franchise, it must build out communities with a population of 7,111 residents per square mile. That amounts to competitive service for the state’s 60 largest cities, including all of its 21 county seats, within six years.

In California, current rules require new entrants to serve the same franchise area as an incumbent video provider. Verizon has proposed to meet the standard by offering its FiOS fiber-to-the-home TV and broadband service in some parts of a community, while elsewhere providing a less-robust bundle that includes digital-subscriber line Internet access and direct-broadcast satellite television.

“Legislators see that as a digital divide,” said Dennis Mangers, president of the California Cable & Telecommunications Association. “It will be tough to explain why [lawmakers] agreed to a buildout in New Jersey, but not here.”

Late last week, California companies were still waiting to see an amended draft of the bill before a floor debate expected to come June 1.

New Jersey cable and telephone companies are waiting to see if Gov. Jon Corzine signs the statewide franchising bill that was resoundingly approved by both houses there.

New applicants must begin offering commercial service within three years of certification. Incumbent operators argued the new rules would raise franchise fees for everyone, including communities that would not see competition. But the final bill set franchise fees at 2% and includes fine for economic discrimination.

The debate over reform ended in South Carolina last week when Gov. Mark Sanford signed a bill with some incumbent-friendly conditions.

Statewide franchising was approved, but local governments must be notified when a new provider applies to serve their area. Those local regulators can file opposition to the applicant and terms.

The secretary of state has up to 85 days to vet and approve the application. Then the new competitor has one year to launch service, or the license will be void. Once a competitor launches in a town, the incumbent operator can opt to seek a state license, too.

 

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