If they get a strong stabile shareholder base, their "product" will have many distribution channels.
UPDATE 1-U.S. FCC wades into local subscription TV battle
Thu Nov 3, 2005 04:51 PM ET
(Adds U.S. House draft bill, consumer comment.)
By Jeremy Pelofsky
WASHINGTON, Nov 3 (Reuters) - U.S. regulators on Thursday agreed to review whether they should intervene to ensure telephone companies can easily launch subscription television services without obstacles from local officials.
The Federal Communications Commission voted to seek comment on the extent of its authority over the licensing process, whether new entrants have been stymied by local officials and what steps the agency should take, if any.
"We are hearing from some providers that local authorities may be making the process of getting franchises unreasonably difficult," said FCC Chairman Kevin Martin. "New video entrants ... should be encouraged, not impeded from entry."
Verizon Communications (VZ.N: Quote, Profile, Research) and SBC Communications Inc. (SBC.N: Quote, Profile, Research) , the two largest local U.S. telephone carriers, are both rolling out their own television services to compete with cable companies like Comcast Corp. (CMCSA.O: Quote, Profile, Research) and Time Warner Inc. (TWX.N: Quote, Profile, Research) .
Companies that want to offer video services typically have to obtain licenses -- known as franchises -- from local authorities, a process that can be lengthy because there are thousands of towns and cities. They often have to pay a portion of their gross revenues to the cities as well.
Verizon and SBC have lobbied hard in state legislatures and Congress to ease franchise rules, with mixed results.
U.S. House Energy and Commerce Committee Republicans on Thursday unveiled a second draft of a bill to overhaul communications regulations, including easing franchise requirements, after Verizon criticized the first draft.
FCC Commissioner Jonathan Adelstein said that while consumers could benefit from lower prices with additional competitors, the agency's authority may be limited.
"The commission needs to tread with caution and care before it asserts any authority to interpose itself with local franchise authorities to the extent Congress specifically delegated power to local officials," Adelstein said.
The National League of Cities' committee chairman for technology and communications policy, Ken Fellman, expressed concern about the FCC's action.
"Because Congress has granted the FCC only minimal authority to influence local franchises, we view with concern any future FCC action to limit local involvement beyond its statutory authority," said Fellman, who also is mayor of Arvada, Colorado.
New York-headquartered Verizon plans to have its Fios fiber-optic phone, high-speed Internet and video service within the reach of 3 million homes this year and expand to another 3 million households next year.
"Some communities make unreasonable demands -- everything from multimillion dollar grants ... to insistence that a new entrant buy local street lights from the power company and turn them over to the community," Verizon said.
Verizon already has 35 franchises, serves another four unincorporated communities and is in talks with another 300 communities.
SBC, based in San Antonio, Texas, plans to roll out its own video services in earnest next year and has already received permission to offer it in communities around its hometown. The company has also argued that such licenses are unnecessary.
"The key question as to whether the Bells (big local telephone carriers) will be meaningful competitors at the local level will depend in large part on whether they serve everyone in the community," said Jeannine Kenney, senior policy analyst at Consumers Union.
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