FCC Rules on Franchise Agreements

FCC Rules on Franchise Agreements

Commission passes order to make entering into cable franchise easier.

It is unclear what affect the Federal Communications Commission's recent order for localities to provide competitive cable franchises for its residents will have on Loudoun County.

The FCC released the order March 5, almost three months after voting to approve it, in order to make it easier for new telecommunications companies to enter a local market.

"We find that the current operation of the local franchising process in many jurisdictions constitutes an unreasonable barrier to entry that impedes the achievement of the interrelated federal goals of enhanced cable competition and accelerated broadband deployment," the FCC's report said.

According to the report, the new order will provide federal-level limitation on the authority of localities during the franchising process in order to "promote the availability to the public of a diversity of views and information through cable television and other video-distribution media."

IMMEDIATELY FOLLOWING the release, several groups, including the National Association of Counties and the National Association of Telecommunications Officer and Advisors, put out statements questioning the FCC's decision.

"We understand the need to get new interests in to localities," Jeffrey Arnold, deputy legislative director of the National Association of Counties, said. "We don't think the FCC has the authority to make these decisions."

Arnold said there are many inaccuracies in the FCC's report, including its assertion that localities are placing unreasonable build-out requirements, which state that a franchise provide cable service to parts or all of the franchise area within a specified period of time, on applicants.

"There is no example of unreasonable build-out in their report," Arnold said.

Boyd Garrett, the Potomac District representative on the county's Cable and Open Video Systems Commission said he is not sure why the FCC believes the actions of localities have warranted a change that took away local control over video services.

"While I don't want franchisees to face a widely varying patchwork of regulations across their service area, there are unique needs that can be addressed under the current franchise regime that will be eliminated under this change," he said.

WITHIN THE LAST year, the county has approved two different franchise agreements. The agreement with Verizon was approved in June 2006, while agreement with Comcast Cable Television was reached only last month.

"With those new two agreements in place, we don't think there should be any problem," Lorie Flading, the county's cable television liaison, said. "We think that they are valid and hope there won't be any changes made to them."

David Fish, executive director of media relations for Verizon, said the FCC's order should not affect existing franchise agreements.

The county's agreements with Verizon and Comcast are similar, providing the county $100,000 upfront and $1 per subscriber per month. The funds would be available for use in support or construction of public, educational and government channels and the Institutional Network. The companies will begin paying the funding of approximately $300,000 per year for the channels and the network in addition to the 5 percent franchise fee, which totals approximately $1.2 million per year.

While Flading said that the county does have an attorney reviewing the FCC's order and its possible impact on the county, she said she is not sure what position the county will take or whether it will comment on the ruling.

"[The FCC] has given us some time to respond, but we are not sure if we are participating in that," she said.