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FCC rules telcos not subject to franchise regulation.

The need for strenthened cable legislation was clarified last week when the FCC ruled, again, that telephone companies providing video services are not subject to local franchise agreements.

The Federal Communications Commission (FCC) left unchanged its original ruling on "video dialtone" technology, which fails to protect either the public interest or right-of-way.

In a July 16 meeting, the FCC adopted a series of documents that creates a Commission policy on "video dialtone"--an industry term for an assortment of information services that could be viewed on television, and accessible on demand through fiber optic telephone lines. The technology itself is far from fully developed, yet over the past year the Commission has appeared compelled to create a policy framework on this issue.

NLC has generally supported telephone company (telco) entry into the video services marketplace, subject to the franchise process, appropriate regulatory conditions and safeguards against cross-subsidization. However, in a resolution, passed by the full membership this past December at the Congress of Cities, NLC specifically called upon the federal government "to require telephone companies offering video dialtone cable services to be subject to the same franchise requirements and regulations as existing cable television companies."

Through their decision to exclude video dialtone from the local franchise process, the Commission has exempted telcos not only from collecting a franchise fee for rights of way, but also from providing public educational and government channels, facilities and equipment.

According to the Commission, the distinction between video dialtone and cable services is the service deliverer's ability to actively participate in the selection and distribution of programming. The FCC believes that because telephone companies have no control over the program content, they are not providing "cable service" as defined by the 1984 Cable Act.

This decision focuses greater attention on the current legislative proceedings with regard to cable legislation. In a statement regarding the decision, Commissioner Sherrie Marshall recommended that legislators who are worried about "cable's ability and incentive to abuse the American consumer" should "rest easy" in light of the competition to cable that would come with the advent of these services. Marshall went on to say that the "decision should serve as one more powerful argument for the President in rejecting current legislative efforts to reregulate the cable industry."

In a strongly worded letter to the entire membership of the House of Representatives, the National League of Cities, along with the National Association of Telecommunications Officers and Advisors, the National Association of Counties, and the U.S. Conference of Mayors stated that the FCC's video dialtone decision "increases the need for passage" of strong cable television legislation. The local government letter also pointed out that "the promises of video dialtone technology are still years into the future" and until cable operators face viable competition, "the nation's cable subscribers need protection now from unfair rate increases and other abuses by cable operators."

The House cable bill, H.R. 4850, has since been overwhelmingly approved in a floor vote of 340-73 on July 23. The legislation now awaits Conference Committee action before going to the President's desk. Local elected officials are strongly encouraged to write to their U.S. Representatives who voted favorably on H.R. 4850, thanking them for their support and encouraging an expeditious conference committee process. For more information call Anna Ferrera in the Center for Policy and Federal Relations.
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Title Annotation:Federal Communications Commission, telephone companies
Author:Ferrera, Anna Pulido
Publication:Nation's Cities Weekly
Date:Aug 3, 1992
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