Bells Would Get Head Start on Cable Under Tex. Bill
Tex. video franchising legislation expected to get a vote Sun. by the Tex. House has imbalances in treatment of cable operators and Bells, a cable industry official said. Senate Bill 21, which Wed. passed the Tex. Senate by a wide margin (CD July 15 p2), gives Bells a head start in seeking statewide franchise certification Sept. 1. Cable operators such as Comcast and Time Warner must wait until 2008 to pursue statewide franchises, said Tex. Cable & Telecom Assn. Vp-Govt Relations Kathy Grant. Analysts said the imbalance is a slight negative for cable.
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Cable providers’ local franchise pacts are “grandfathered” under the bill, said Bill Bragg, spokesman for Tex. Senator Troy Fraser (R), who wrote the legislation. Most such accords in the state don’t expire until 2008 or later, Bragg said. Hence, most cable systems won’t fall under statewide authority for at least 2 years after Bells can apply. “We are trying to kind of let SBC and Verizon ramp up their programs,” Bragg told us, “so that when they do decide to come into the market there won’t be a lapse in revenue streams” for municipalities.
“It is very, very nice special treatment for” the Bells, Grant said. “If they can’t make it with this kind of leg up, then by God they don’t deserve to be in business.” The bill also is opposed by a group of CLECs called TEXALTEL, which said in a statement the plan would have “disastrous effects.” The legislation was likely to face a full House vote sometime after 2 p.m. local time Sun., Bragg said.
Observers said the bill had a good chance of passing. That would make Tex. the first to legislate a statewide video franchise, UBS cable analyst Aryeh Bourkoff said Thurs. “It certainly looks as if they have gotten really close, and they may get this,” TCTA’s Grant said: “Time will tell, and there is not much time.” The special legislative session is due to end July 21, she said. The cable industry’s best hope is for House lawmakers to consider making changes, Grant said.
The silver lining may be that Bells aren’t yet widely selling their own pay-TV services, in Tex. or elsewhere. “The cable companies are nervous about this, but they probably don’t have anything to worry about for another couple of years at least” said Forrester Research analyst Josh Bernoff: “The Bells have a lot of problems with their rollout.” Another analyst noted that Tex. Is home to only about 5% of U.S. access lines.
Officials from SBC and Verizon have said their pay-TV programs haven’t had major problems. “The Bells need franchise relief in 95% of the country,” said Precursor Group CEO Scott Cleland. “Every day that the Bells have to spend on local franchises is another day that cable can extend its lead and lock up customers.”