FCC backs telephone companies in TV fight

Federal regulators Wednesday handed a victory to the nation’s two biggest phone companies by barring local governments from imposing unreasonable conditions on new pay- television providers.

The 3-2 vote by the Federal Communications Commission makes it easier for AT&T; Inc. and Verizon Communications Inc. to roll out TV programming to compete against cable companies.

AT&T; and Verizon have long complained that cities and other municipalities make them jump through unnecessary hoops before they are allowed to sell television service.

Critics of the FCC’s decision argue that local officials understand their communities and are in the best position to know what conditions are appropriate to protect their constituents.

Analysts predicted that the rules would be challenged in court.

The decision doesn’t override recently passed statutes in California, Texas and seven other states that have removed the authority of cities and counties to issue video franchises. But it does streamline the rules for new pay-TV providers.

For instance, local governments won’t be able to take more than 90 days to act on requests or require networks to be completed before service can be offered.

“It is critical to make sure we’re doing all we can to bring competition to the marketplace,” FCC Chairman Kevin J. Martin said.

The phone carriers hailed the decision, which did not free cable companies from their existing obligations.

“Today’s action will fast-forward the delivery of new choices, lower prices and better services to consumers,” said Susanne Guyer, Verizon’s senior vice president for regulatory affairs.

Robert J. Quinn, Guyer’s counterpart at AT&T;, said video competition and broadband deployment shouldn’t be “held hostage” to old rules designed for a time when cable TV had a monopoly.

But the action drew sharp rebukes from the two dissenting Democrats on the commission, Michael J. Copps and Jonathan S. Adelstein, as well as from the cable TV industry and local governments. Copps and Adelstein, who questioned the legal authority for the agency’s action, said customers needed more choices for video and broadband service.

“But agreeing on the many benefits of video competition is hardly the same thing as coming up with rules that will actually encourage honest-to-goodness competition,” Copps said.

The cable industry drew hope from what it saw as an FCC warning that the order “isn’t a license for AT&T; to ignore the franchising process and operate under different rules from its competitors,” said Kyle McSlarrow, president of the National Cable & Telecommunications Assn. trade group.

Nevertheless, he said, the decision doesn’t provide a level playing field on which cable and phone companies can compete.

Don Borut, executive director of the National League of Cities, said he was “confounded” by the FCC’s action because it wasn’t in the best interest of consumers.

The franchising vote came after the FCC received a staff report on soaring price increases for cable TV service. Adelstein said the findings showed that cable companies were using unilateral market power to set unreasonable prices, which have risen 93% in a decade.

Satellite TV service has not been effective in forcing the cable industry to reduce prices, the report found. But in the few areas of the country where phone and small cable companies compete, the staff found that monthly prices were cut by 17%.

Martin, the chairman, cited situations in which cities and counties took more than two years to act on applications and imposed conditions that bore no relation to providing TV service.

Those conditions, he said, included requiring phone companies to provide cameras to film a holiday visit from Santa Claus and to film a math tutoring program, build a recreation center and pool, and pay fees upfront and above the 5% levy on revenue allowed by law.

Copps and Adelstein said such stories were out of context, considering all other applications for video franchises. The local franchising system wasn’t broken beyond repair, they argued.

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james.granelli@latimes.com