Cities cry foul over new FCC cable rule

The policy change won approval by the Federal Communications Commission on a 3-2 vote Dec. 20. That angered local government officials who claim the agency overstepped its authority and now promise a legal challenge. The vote also drew the threat of a "legislative fix" from a powerful congressman.

The new rules are meant to spur more competition for cable television providers. They require local governments to speed up the approval process for new competitors, cap the fees paid by new entrants and ease requirements that competitors build systems that reach every home.

Consumer groups long have complained about rising cable rates and poor service, blaming the problems on a lack of competition.

But opponents of the FCC's action say the new rules amount to a "federalization" of the cable franchising process. They contend the change will mean a loss of local oversight, fewer dollars for public and government access channels and the possibility of "cherry picking" by companies that choose to serve only the richest neighborhoods.

Supporters of the policy change have cited dozens of instances in which local governments have made unreasonable demands of new competitors, effectively blocking them from offering service.

It was one of those claims that raised the ire of David L. Smith, the city attorney in Tampa, Fla. He said the FCC chairman, Kevin Martin, made a "blatantly inaccurate allegation" about Tampa's conduct during franchise negotiations with Verizon Communications Inc.

Martin was quizzing an agency employee during a commission meeting before casting his vote when he asked: "Is Verizon still required to film the tutoring classes for the math classes in Tampa, Florida, in order to get a franchise?"

Rosemary Harold, a deputy chief in the FCC's Media Bureau, answered, "Yes, Mr. Chairman."

Smith, who negotiated with Verizon in Tampa, says Martin's allegation was neither in nor a condition of the franchise agreement. Martin's characterization, the lawyer said, was "complete and abject fiction."

Smith also said the FCC had never contacted him about the claim.

In an interview, Martin said he probably should not have used the word "still" but largely stood by his argument — that Tampa was making an unreasonable demand of Verizon. He said he had not responded to Smith's letter, but would do so.

The stakes in this battle are high.

Companies such as Verizon and AT&T are spending billions of dollars to lay fiber-optic cable in their service areas in the hope they will be able to compete with the cable television industry.

The Tampa allegation outlined by Martin first appeared in a Wall Street Journal story in October 2005 that painted a sympathetic portrait of Verizon's travails in gaining franchises.

The account said Verizon, seeking permission to offer TV service in Tampa, was presented with "a $13 million wish list" of items it needed, including "video cameras to film a math-tutoring program for kids."

The story stated that "Verizon lawyers saw it as a demand."

Less than a week after the story ran, the FCC opened its proceeding on video franchising.

Smith said Tampa gave Verizon a $13 million "needs assessment" that he says was required by law to obtain contributions for equipment for public access and government channels. The city's existing cable franchise, Bright House Networks, had paid $5.5 million and pledged $1 million more, he said.

Smith also said under Florida law, a competitor would be required to match that amount to obtain a franchise.

Oddly enough, Verizon mentions the tangle with Tampa in its comments with the FCC, but does not name the city, nor does it make a reference to the math program. It did, however, revise its comments and apologize after a complaint from Tampa about how the company represented the negotiations.

AT&T, however, listed the newspaper story in its FCC filing as part of 37 pages of examples of local communities erecting barriers to competitors.

In addition to dealing with angry local governments, the agency's video franchise decision faces other challenges.

Rep. John Dingell, chairman of the House Energy and Commerce Committee, said through a spokeswoman that he believes the agency overstepped its authority.

Spokeswoman Jodi Seth said Dingell, D-Mich., plans to "review the FCC's action in the course of the committee's oversight this year. At that point, he may decide that a legislative fix is necessary."

local angle

The city of Tucson and cable-TV provider Cox Communications have been wrangling for nearly a year over renewal of the company's city franchise.

A key issue is the number of public access, education and government channels (PEG) Cox will provide. Cox has proposed keeping just four of nine current PEG channels.

Earlier this month, the City Council voted to put Cox through the costly and time-consuming federally mandated license-renewal process for the company to maintain its Tucson cable franchise. But the council also said the formal process could be suspended if Cox and the city can agree on several remaining sticking points, including keeping five PEG channels.

The formal renewal process could result in denial of Cox's franchise and the city seeking another cable provider — although people on all sides say that's unlikely and would lead to litigation.