Franchise ruling swings regulatory favor to telcos

The TV services arena continues to be one in which there is often trade-off between regulatory set-backs and regulatory progress for telcos.

Telcos were recently dealt a blow in their efforts to compete against cable TV companies when the Federal Communications Commission voted Verizon Communications couldn't use information about voice customers it was losing to cable TV companies in order to win the customers back. That decision hinted that telcos at large would face an uphill battle trying to win back customers who departed for cable land, even as they continue to gain video momentum.

However, the regulatory wind direction has changed back slightly in favor of telcos. The U.S. Court of Appeals for the Sixth Circuit in Cincinnati issued a ruling last week that backs up the FCC's attempt to impose some control over municipal-level cable and video franchising. The ruling supported the FCC's position that municipalities need to approve or reject franchise applications within 90 days, or they are considered approved. It also affirmed the notion that telcos not be required to provide video service to low-income areas as part of franchise agreements.

This ruling provides a little payback, indicating that franchise approvals at the municipal level will start to accelerate. It may be payback the telcos don't necessarily need anymore, since they have continued to receive franchise authorization from state-level governments in a number of states. Still, the decision will help ensure a single community can't put too high a price on its municipal video rights.

Interestingly, the one commonality between these two moves--the FCC ruling and that court decision--is FCC Chairman Kevin Martin's support for the telco cause. He is the only dissenter in the FCC's ruling against Verizon, and the court ruling re-affirms a position he strongly supports. Martin continues to be a friend to telcos, and something less to their cable TV foes.

-Dan

For more:
- see this report at The Wall Street Journal

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