Policy

DOJ Backs Swift Franchising Process

5/12/2006 8:00 PM Eastern

The U.S. Department of Justice supports federal regulations that would bar local governments from dragging out franchise negotiations with phone companies and other firms seeking to compete with incumbent cable-system operators such as Comcast Corp. and Time Warner Cable.

“Such delays in the franchising process effectively deny consumers the benefits of additional video competition and advanced services for a significant period of time,” said Thomas O. Barnett, chief of the DOJ’s Antitrust Division, in a May 10 filing with the FCC.

At a minimum, Justice attorneys support adoption of rules by the Federal Communications Commission that would impose a deadline on local governments to act on cable-franchise applications.

TIMETABLE RESTRICTIONS KEY

Also key to new competitors such as AT&T Inc. and Verizon Communications Inc., the DOJ called for restrictions on local governments’ ability to set a timetable for the buildout of new cable facilities within their communities, saying that those kinds of mandates can deter entry.

“The department believes that [local governments] should not be allowed to impose any such requirements except where necessary to prevent income discrimination, which [federal cable law] prohibits,” the DOJ said.

The DOJ said it disagreed with the National Cable & Telecommunications Association’s view that the buildout of an entire franchise area was necessary to prevent income discrimination, however.

“This argument is flawed,” the DOJ said. “The fact that a franchise applicant does not plan to build out to cover either the [local government’s] entire jurisdiction or the whole area served by an incumbent does not necessarily evidence income discrimination.”

A phone company that did not want to extend video services beyond its existing phone network would be an example of a situation where income discrimination was not involved, the DOJ said.

At press time, the NCTA was reviewing the DOJ filing. “However, for the past year NCTA has suggested that changing the current law to provide for a streamlined franchising process makes sense and proposed the shot-clock approach to speed approval of franchises,’’ said Brian Dietz, vice president of the lobby group. Federal law also “should treat providers of like services alike,” he said.

ADDING TEETH

Under federal law, a cable operator must acquire a local franchise. The FCC, under chairman Kevin Martin, is considering rules that would put some teeth into the law that says local franchising authorities “may not unreasonably refuse to award an additional competitive franchise.”

AT&T and Verizon have complained that their ability to rush into cable markets has been stymied by foot-dragging at the local level. Questioning those claims, cable operators have said that phone companies are acquiring franchises faster than they can deploy their services.

In its filing, the DOJ said local governments often do not act because the applicant is refusing to embrace all of the conditions met by the incumbent or the incumbent is promising to sue the local government under level-playing-field laws if new entrants are subject to less-stringent requirements. These can range from the size of franchise fees to the pace of facilities deployment, or even demands that “are not relevant to providing cable service.”

The DOJ said examples include requests for space in telecommunications conduits for governmental use and the planting of flowers and trees.

September