January 29, 2006

Congress unlikely to ease TV rules for US telcos soon

By Jeremy Pelofsky

WASHINGTON (Reuters) - The chances are seen as slim that
the U.S. Congress will pass legislation in 2006 to make it
easier for companies like Verizon Communications to offer
subscription television service despite intense lobbying.

The U.S. House of Representatives and Senate are working on
bills that would simplify the process for new companies to
enter the video market, but they are part of larger bills to
speed deployment of high-speed Internet service, or broadband.

Local authorities typically require cable television
providers to be licensed before they can offer service, called
franchising, and often includes paying compensation to cities.

Verizon and AT&T Inc., the two largest U.S. telephone
companies, are rolling out television service but argue
obtaining permission from thousands of local jurisdictions
takes too long.

So as they face stiff competition from cable companies like
Comcast Corp. in the telephone and broadband business, the
telephone carriers are seeking franchise relief in state
legislatures and from Congress.

The Senate Commerce Committee on Tuesday plans to examine
the system, but Congress is working on a short schedule because
many lawmakers are running for reelection in November. And the
complicated nature of communications issues often makes it
difficult for lawmakers to reach consensus quickly.

"Congress wants to promote Bell (telephone companies) entry
into video and is considering franchise relief, but we believe
legislation is unlikely before mid-2007," according to a
Stanford Washington Research Group report last week.

Analysts at Stifel Nicolaus, which also watches the issue,
said in their own report this month that "unless dynamics
change, congressional relief (is) an uphill fight this year,
making state, local battles more critical."

A senior Verizon executive last week suggested Congress
consider an alternative -- approving a bill that just makes
getting franchises easier, instead of a broader broadband bill
that could get bogged down.

"The bottom line is we're anxious for movement," said Tom
Tauke, Verizon executive vice president for public affairs
policy and communications. "We are looking for a way to move
through the video franchising process with some ease."

He did acknowledge that it may be difficult for legislation
to pass this year.

"It's tough, I don't disagree that this is a challenge,"
Tauke said. "Given the short time available and also the
commitment, my sense is we need to suggest to Congress that
they focus on what's doable now."

However, that idea was rebuffed by a spokesman for the
House Energy and Commerce Committee, through which any
communications legislation must pass.

"Clearly we think it's premature to talk about separating
portions of the broadband bill," said panel spokesman Terry
Lane. "The chairman is committed to working on comprehensive
broadband regulatory reform."

At the end of 2005, Verizon had received about 50 local
franchise licenses and were in negotiations in some 400 other
communities, Tauke said.

Texas has passed legislation that allows companies to apply
for a statewide franchise and other states, including Virginia
and New Jersey, are considering similar measures.