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FCC Plays Santa for AT&T, Verizon

Telecom-Backed Measure Bypasses Local Regulators

By James R. Hood
ConsumerAffairs.com

December 20, 2006

Broadband Access • Comcast to Cap Internet Usage for Customers • Comcast to Slow Internet Speeds for Heaviest Users • Report: Metered Broadband Bad For Consumers, Businesses • FCC Votes to Punish Comcast for Content Blocking • Comcast Tries to Polish Its Image • Communications Industry Urges Congress to Act on Broadband • Comcast Cuts Deal With Vonage on Internet Traffic • Court Upholds FCC's Video Rules • Report: U.S. Broadband Adoption Slowing • Critics: FCC Inaction Slows Economic Development • Few Are Neutral in Net Neutrality Battles • Google Petitions FCC Over Verizon's Use of Wireless Spectrum --- More ...

As expected, the Federal Communications Commission (FCC) today voted to impose a new franchise system that makes it easier for AT&T and Verizon to provide cable television service without seeking local government approval.

By a 3-2 vote along party lines, the commission adopted the controversial measure, which gives local governments 90 days to decide whether to grant a new franchise to the telecom giants. It also eliminates a long-held policy that requires new entrants to provide service to all residents in an area.

Critics said the measure was a political payback that would allow the telecom giants to "cherry-pick" neighborhoods, providing service in affluent areas while ignoring poorer areas or those more expensive to serve.

"This is legislation disguised as regulation," said Democratic commissioner Jonathan Adelstein. He and Democrat Michael Copps voted against the measure.

Adelstein ridiculed the telephone companies' argument that the local franchise process was an impediment to competition. He said there was not a single instance of a community failing to grant franchises to new entrants. FCC staff members admitted under questioning that he was correct.

Nevertheless, chairman Kevin Martin hailed the new rule as providing "more competition through deregulation." Voting with Martin were fellow Republicans Robert McDowell and Deborah Taylor Tate.

Martin insisted the new rules would help speed deployment of broadband Internet access. He said the telephone companies would be more likely to build new broadband networks if they were able to sell the full "triple play" of video, broadband and landline services.

Martin and the telecoms have noted that there are at least 10,000 local communities with cable franchises in the U.S. and argued it would be too much trouble for the newcomers to submit to local regulation in all those localities, even though cable systems have done so since their founding.

Opponents aren't likely to go away quietly. Local governments and the cable industry have indicated they will challenge the new rules in court, and Congress may weigh in as well.

Rep. John Dingell (D-Mich.), the incoming chairman of the House Energy and Commerce Committee, wrote Martin recently demanding to know what legislation granted the FCC the authority to essentially scrap a franchise system that has been in place for decades.

Friends of AT&T were quick to applaud the commission's action.

"Consumers benefit whenever there is a second cable or wire into the home for cable or video service," said Samuel A. Simon, Chairman and founder of Telecommunications Research and Action Center (TRAC), a Washington, D.C., organization that calls itself a consumer group.

"It is clear that the incumbent cable operators have every incentive to delay competitive entry, and that they are using their influence at every level to achieve this goal," said Simon. "With these new rules, we believe consumers will now see a more rapid roll out of Verizon and AT&T video services," he said.

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