California passes bill easing cable rules

By Adam Tanner

SAN FRANCISCO (Reuters) – California’s legislature passed a
bill on Thursday night aimed at increasing competition among
cable television providers and easing the ability of telephone
companies to enter the market.

The state’s Assembly by a vote of 64 to 5 backed an amended
bill passed by the California Senate the night before. The
Assembly had approved an earlier version of the legislation in
May.

“California has led the way in the evolution of new
technology, and with this bill, our state’s policy toward
contemporary TV and entertainment technology is catching up to
the times,” Assembly Speaker Fabian Nunez, who has championed
the legislation, said in statement.

The measure, passed ahead of a midnight deadline for new
bills, still needs the signature of California Gov. Arnold
Schwarzenegger to become law.

The bill eliminates city-by-city franchises, which Nunez
said made it nearly impossible for rivals with new technologies
to enter California’s market for TV entertainment services.

According to an analyses by the state Senate’s Rules
Committee, 63 percent of California TV-watching households have
cable reception, 27 percent subscribe to satellite service and
the rest use conventional antennae.

TELEPHONE COMPANIES TO GAIN

Telephone companies including AT&T Inc. have lobbied to
eliminate laws requiring franchise deals with municipalities
before they may offer television service. Verizon already
offers television service in six California cities.

AT&T plans to invest up to $1 billion in California through
the end of 2008 to upgrade its telephone network in the state
and to launch an Internet-protocol video entertainment service,
which would compete with cable-TV companies.

The California legislation comes as lawmakers in
Washington, D.C., are considering a bill that would make it
easier for telephone companies to get licenses for cable
television service. Yet, Congress has a short calendar this
year and may not act.

Other states, including Texas, have passed similar
legislation making the licensing process simpler. If Congress
does not act, analysts expect other states to follow Texas’ and
California’s lead.

Telephone and cable companies are fighting to sign up as
many customers as possible for a bundle of services including
telephone, cable television and high-speed Internet access,
which often cost more than $100 a month.

(Additional reporting by Jeremy Pelofsky in Washington)