Phone Firms Get Anaheim Mayor’s Backing to Offer TV Service Free of Limits on Cable

Anaheim Mayor Curt Pringle broke with mayors nationwide Tuesday by proposing to abolish local pay TV fees and to allow phone companies to sidestep the rules that cable companies currently must follow.

In his state of the city address, Pringle said the typical cable franchise agreements and “other restrictive policies” built into old laws were “standing in the way” of creating a more competitive pay TV market. He wants to allow AT&T; Inc. to work on upgrading its network to carry video, even without a written agreement with the city.

Pringle’s proposal puts the city in the middle of a heated war between regional phone companies and cable TV operators over rules governing the delivery of television programming.

In siding with AT&T;, Pringle parted ways with state and national mayoral and municipal groups including the U.S. Conference of Mayors, the National League of Cities and its California chapter and the National Assn. of Telecommunications Officers and Advisors, a group of local government telecom officials and consultants.

Those groups have insisted that phone carriers play by the same local rules as cable companies in an attempt to ensure, among other things, that all of a city’s residents get service.

“Throwing away local franchising is not the solution that will bring competition or rapid entry by competitive providers,” Lori Panzino-Tillery, president of the telecom officials’ group, wrote in testimony prepared for a U.S. Senate hearing on the issue this month.

As Congress considers making changes to the Federal Telecommunications Act of 1996, Panzino-Tillery said, it should be careful not to “deprive local governments of the tools necessary to ensure the timely deployment of services within our communities.”

Phone carriers have been drumming up political support to get around local bargaining over rights of way, franchise agreements and other issues that the companies say are delaying their pay TV rollout.

Texas, for instance, has adopted legislation to let phone companies obtain statewide video franchises, removing the issue from local control.

AT&T; and Verizon Communications Inc., California’s two major local phone companies, have not begun delivering pay TV here. Nationally, they serve only a few cities, using a technology called Internet protocol television, or IPTV.

Pringle’s stance could ease the way for AT&T; to put Anaheim on the fast track for getting an IPTV network. He said the city and the carrier were in talks.

“Whether it is through cable, satellites or new concepts like Wi-Fi or this IPTV system, the more choices to the consumer, the better,” Pringle said. “Let these various systems compete in price, quality and quantity, and let consumers decide.”

However, satellite TV isn’t bound by cable rules, and Wi-Fi wireless broadband networks sprouting up in Anaheim and hundreds of cities nationwide aren’t yet robust enough to carry pay television.

Through a 5% franchise fee, which is passed on to cable subscribers, Anaheim raises $1.4 million a year in revenue. Pringle said in an interview that the money was important, but he predicted that residents would probably approve eliminating the fee, given their recent vote to drop a city utility tax.

He said that if he had his way, the city would have some kind of simple agreement with AT&T.; But he couldn’t say whether Time Warner Inc.’s cable unit, which is taking over cable service in the city, would be afforded the same loosening of its obligations.

Dennis Mangers, president of the California Cable & Telecommunications Assn., a cable industry group, said he would welcome any rollback of franchise fees, but he said Pringle needed to clarify what other changes he sought.

AT&T; already has begun upgrading its network, said Mark Leslie, a local AT&T; executive. But he would not give a date for starting service or completing work.

As for reaching all residents, he said: “We will start out with a small footprint and, over time, expand on it.”