U.S. News

Divided FCC Approves New Cable Rules

A sharply divided Federal Communications Commission voted 3-2 along partisan lines Wednesday to impose new measures meant to ensure that local governments do not block new competitors from entering the cable television market.

FCC Chairman Kevin Martin also released a new pricing report that showed in 2004, rates for basic and expanded cable, which account for about 84% of subscribers, rose 5.2%. Over a 10-year period, rates had increased a total of 93%, the report said.

The new franchising rules will require local cable franchising authorities to act on new applications from competitors with access to local rights-of-way within 90 days, and within six months for other new competitors.

The FCC will also ban local governments from forcing new competitors to build out new systems more quickly than the incumbent carriers and to count certain costs required of new carriers to go toward the 5 percent franchise fee they must pay.

Democrats Jonathan Adelstein and Michael Copps harshly criticized the measure, questioning the agency's evidence that there are barriers to entry by competitors. They also expressed concern over a loss of local control by franchise authorities over cable companies and expressed concerns over whether the FCC has the legal authority to impose the new rules.

The price survey also showed that competition from direct broadcast satellite competitors like DirecTV has little if any effect on cable prices, while in areas where there are wireline competitors, like municipal cable providers and overbuilders like RCN, rates are 17% lower.

Telecommunications companies including Verizon Communicationsand AT&T have been lobbying aggressively to make it easier to obtain local franchises as each company sinks billions of dollars into its networks in order to deliver video programming.

The approval came despite a warning from the incoming chairman of the House Energy and Commerce Committee questioning whether the FCC has the legal authority to issue the new rules.

In a letter written Tuesday, Rep. John Dingell, D-Mich., wrote, "It would be extremely inappropriate for the Federal Communications Commission to take action that would exceed the agency's authority and usurp congressional prerogative to reform the cable television and local franchising process."

Critics have claimed that there are no guarantees that new competitors, like Verizon Communications, which has spent billions rewiring its telecommunications system to offer video services, will result in lower prices for consumers.