Despite their eagerness for competition in video services, local government officials are wary of bills before Congress that would create a national video franchise process managed by the Federal Communications Commission (FCC). At risk are consumer protections, local rights of way control, funding from franchise taxes and local programming requirements. Unless the legislation is amended to allow local enforcement and to maintain contributions from video providers, cities will suffer, say Washington insiders.

“The last time I checked, the streets and sidewalks are local,” says Libby Beaty, executive director for the Alexandria, Va.-based National Association of Telecommunications Offices and Advisers. “Our ability to control, enforce, manage and protect our consumers are all local issues, and not things the FCC handles. Since when does the FCC have any expertise in rights of way, public works, engineering or construction? And how much success would [consumers] have complaining to the FCC?”

On the other side, telecommunications service providers, such as San Antonio, Texas-based AT&T and New York-based Verizon, are pushing for such legislation so they can offer video services without applying for franchises from each locality. Their efforts are paying off: A bill to authorize a national franchise agreement passed the House Energy and Commerce Telecommunications and the Internet Subcommittee by a 27-4 vote in early April. The measure was sponsored by Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Commission. Similar legislation, sponsored by Sen. Gordon Smith, R-Ore., and Jay Rockefeller, D-W.Va., also has been introduced in the Senate.

The federal bills are only part of the picture, however. Three states — Texas, Virginia and Indiana — have passed statewide franchise bills, and legislation is pending in Kansas, Missouri, New Jersey, South Carolina and California, and is expected in Florida, Louisiana, Michigan and North Carolina.

Local officials are concerned that in the haste to let the telecommunications service providers create video service competition, critical details are being left out, says Ken Fellman, Arvada, Colo., mayor, who represented the Washington-based U.S. Conference of Mayors in congressional testimony in March. While AT&T, Verizon and others say they will pay local service fees and support local programming, specifics of how that happens need to be part of any legislation, Fellman says.

Build-out requirements are the major issue on the table, and on that score, the House subcommittee rejected a plan to require new entrants to serve an entire community and not just upscale neighborhoods. If new entrants can pick the neighborhoods they serve, then current cable companies could lower rates to compete only in those neighborhoods. “There is nothing in this law to preclude cable companies from lowering rates where they have to compete and raising them where there is no competition to subsidize the other areas,” Fellman says. “So some neighborhoods get a double whammy: no competition and higher prices for their monopoly service.”

Because the House Energy and Commerce Commission approved the subcommittee version of the bill on April 24, any hope for lobbyists for local government interests rests with the full House. Possibly no single measure will be passed into law this year, given that a Senate video franchising bill was introduced May 1 and is substantially different from the House version.

While Verizon pushes for relaxed franchise rules at the federal and state levels, it also is applying for local franchises in seven states and has three statewide franchises. AT&T, meanwhile, says its entertainment offering is not a video service subject to local franchise rules.

Carol Wilson is an editor at large for Telephony magazine, ACC's sister publication.