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from: Denver Post

FCC order may help Qwest's quest

By Kimberly S. Johnson
Denver Post Staff Writer
03/11/2007

Although Qwest has lost attempts to win statewide franchise agreements in three states this year, a recent Federal Communications Commission order on the issue may give the company a much-needed boost.

The Denver-based telecommunications company is seeking to bypass local franchising rules and win permission to offer video service statewide. Proposals failed or were tabled in Colorado, Idaho and Utah, while legislation is pending in Iowa, Minnesota and Washington.

Last week, the FCC issued rules requiring local communities to decide within 90 days on applications to offer TV service from companies that already have access to a community's rights of way. The order limits the types of fees local agencies can collect from TV franchises.

Companies such as Comcast now must negotiate video franchise agreements with individual cities and municipalities. Qwest is following in the footsteps of AT&T and Verizon to lobby for video franchise reform, which would allow franchise agreements at the state level.

"The FCC confirmed everything we've been saying: The current process impedes competition," said Steve Davis, senior vice president of public policy for Qwest. "I think the FCC ruling is causing people to look at the issue."

Qwest officials have said that it has met resistance when trying to approach municipalities. The fact that the company has yet to win a statewide franchise doesn't necessarily hurt its chances to offer video services, said UBS analyst John Hodulik.

"I think it's important, but there are other things at the federal level that's going to help in lieu of a statewide franchise agreement," he said. "The FCC action bolsters their local play. The state is not their only path."

Opponents say statewide legislation would take power and revenues away from local authorities and doesn't require companies such as Qwest to offer service to all neighborhoods.

"What's been lost in this debate is the customer," Davis said. "What we need to do is create competition in cable. I think legislators are starting to warm to that concept and see what the best thing is for the consumer."

Qwest has not announced when or where it plans to roll out cable TV service in its 14-state footprint. It offers such service in parts of Lone Tree, Highlands Ranch and Phoenix.

Nationwide, nine states have passed some form of a state franchise bill, which grants companies such as Verizon or AT&T video franchises, or reforms existing franchise rules. Companies looking to take over video service in Connecticut and Oklahoma don't need franchise agreements.

In Idaho, supporters of statewide franchise legislation withdrew a bill when it failed to pass a subcommittee. At issue were build-out requirements and taking control away from local cities. Both sides - Qwest and incumbent cable providers- have agreed to work together to propose new legislation next year.

"Idaho cities made a legitimate case that all their local issues were appropriate local issues," said Ron Williams, executive director of the Idaho Cable Telecommunications Association, which opposed the bill.
Williams said it was "discriminatory" for Qwest to have franchising rules at the state level, while cable companies had another set of rules at the local level. "The Qwest bill set up a dual system of franchising."
In Iowa, where franchise legislation is pending, state Rep. Libby Jacobs said that there is a need to reform the process, but the current bill needs to be revised.

"We can't have two sets of rules for companies offering the same type of product," said Jacobs, a member of the state's House Commerce Committee, which is slated to hear testimony on the bill later this month. "Regardless of who the provider is, we have to look at how these things are being regulated in a 21st century world."

Staff writer Kimberly S. Johnson can be reached at 303-954-1088 or kjohnson@denverpost.com.