2 Senators Back Cable in Battle With Phone Firms

Two leading U.S. senators sided with the cable TV industry on rules that would govern the introduction of competing video services by telephone companies such as Verizon Communications Inc. and AT&T; Inc.

The phone companies want federal rules that let them add TV service without having to get permission from every municipality first. Sens. Conrad Burns (R-Mont.) and Daniel K. Inouye (D-Hawaii) said the power to grant licenses should remain in the control of states and cities, within certain federal limits.

Local control may make it harder and potentially more costly for AT&T; and Verizon, the two largest U.S. telephone companies, to roll out Internet-based TV services that would compete with cable companies such as Comcast Corp. The phone companies have spent billions of dollars to build high-speed fiber-optic networks.

“The desire for a process facilitating swift entry should not result in a blank check for would-be competitors” to cable TV, Burns and Inouye said in issuing a set of video-franchising “principles” Friday.

This week, though, Anaheim made it easier for AT&T; to install a fiber network to deliver pay TV. Mayor Curt Pringle said that AT&T; would not be held to a franchise agreement to upgrade its system and deliver programming.

Shares of New York-based Verizon rose 7 cents to $31.61 on Friday. San Antonio-based AT&T; rose 27 cents to $26.79. Class A shares of Philadelphia-based Comcast rose 6 cents to $27.08.

Burns, a senior member of the Senate Commerce Committee, and Inouye, who is co-chairman of the panel, said Congress should speed up the local licensing process for companies entering the pay-television market.

Their proposal differs from a bill by Republican Sen. John Ensign of Nevada, who chairs the Senate Commerce technology subcommittee. Ensign’s bill, introduced in July, would enable pay-TV companies to bypass the state and local licensing process.

The Burns and Inouye proposal would subject cable and television companies to similar video licensing rules without eliminating the role of state and local authorities.

Under the plan, a cable company could adopt the same terms and conditions for its local franchise as those negotiated by a new competitor in that market.

Verizon Senior Vice President Peter Davidson and AT&T; spokeswoman Claudia Jones said the proposal would make it more difficult for new competitors to enter the TV market.

The recommendations “perpetuate the status quo, forcing new entrants into negotiations with thousands of entities, and resulting in thousands of different sets of rules” for Internet-based video deployment, Jones said in an e-mailed statement. “Competition will be delayed and consumer choice unrealized.”

Kyle McSlarrow, president of the National Cable & Telecommunications Assn., a cable industry group, welcomed the plan. “These principles strike an appropriate balance between the desire to speed entry for new providers and ensure a level playing field for all competitors,” McSlarrow said in an e-mailed statement.

Senate Commerce Committee Chairman Ted Stevens (R-Alaska) has scheduled a Feb. 15 hearing on television licensing issues. Melanie Alvord, a spokeswoman for Stevens, said he had not endorsed a video-franchising proposal and was working to develop a bill that would reflect a consensus of the committee.

Bloomberg News was used in compiling this report.