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from: USA Today

Control over cable TV shifting
Phone companies want power to go to state, fed level

By Deborah Yao
The Associated Press

PHILADELPHIA — Phone companies are leading efforts to rewrite rules giving local governments control over cable TV in their areas.

Under bills passed or pending in at least 14 states and Congress, pay-TV control would shift to state or federal regulators. That would mean phone and cable companies no longer would have to make individual local franchise deals.

Supporters tout the bills as pro-consumer, saying video competition from Verizon Communications and AT&T will lower prices. Others, including municipalities, argue that the bills cede too many consumer protections to two companies that are almost monopolies.

Texas, Indiana, Kansas and South Carolina signed into law a state-approval process. Virginia passed a variation speeding the local approval process. Similar bills are pending in Pennsylvania, California, Iowa, Michigan, Minnesota, New Jersey, Tennessee, North Carolina and Louisiana. Connecticut ruled that AT&T doesn't need franchises.

Meanwhile, the U.S. House last week passed a bill calling for a national franchise process. A similar Senate bill is pending, though passage is complicated by debate over other issues addressed in the bill.

Critics are upset the legislation lets new video providers choose the communities they want to serve. Currently, cable companies generally must serve all neighborhoods in any city they enter.

“We're afraid that either state or federal bills will allow the phone companies to redline some neighborhoods, to price gouge others, to eliminate benefits to the local community and allow the existing cable company to backslide,” said Ed Mierzwinski of the U.S. Public Interest Research Group.

Phone companies say they are spending billions on networks for TV and high-speed Internet, so it's logical to offer the services first in areas most likely to buy.

AT&T CEO Ed Whitacre said in a speech in May that the initial TV rollout will reach 5.5 million low-income households in 41 markets.

Verizon said its entry into video is good for consumers because it'll force cable to cut prices. “Cable has been the last telecom monopoly, and they have taken full advantage of that by raising prices … for years,” said spokesman Eric Rabe.

Verizon also says its upgrade of its network to optical fiber, which can carry TV, is done with no regard to neighborhoods or demographics.

But it's not just phone companies backing the bills in some states. Several bills have a provision that has outraged consumer groups: Cable companies could back out of existing local deals and get the same rights as the new TV provider. If the new provider doesn't have to serve the whole town, cable wouldn't have to, either.

That's a reason the National Cable and Telecommunications Association, generally wary of state franchise laws, now backs some state bills and the bills in Congress. Spokesman Brian Dietz said the industry goal is a level playing field “so the marketplace decides winners and losers, not regulations.”