Fight about TV over IP coming to Congress

Cable television carriers duel with telecoms over rules

WASHINGTON - TV over IP (Internet Protocol) may come eventually to a television set near you, but not before a regulatory fight in the U.S. Congress.

It's a fight pitting two giant industries against each other -- cable television carriers versus the largest telecommunications carriers -- with the two sides arguing over the rules that will govern competition for traditional television and advanced video and broadband services offered to U.S. residents.

While telecom giants SBC Communications and Verizon Communications are already beginning to roll out IPTV services, they're also asking Congress to streamline the rules that forced cable TV carriers to negotiate franchise agreements with every local government where they provided service. The large telecom carriers faced heavy regulation in the traditional telephone market when they were the only providers, they argue, but when Congress opened up voice calls to competition in the 1996 Telecommunications Act, competing carriers had fewer regulations.

Two bills now before Congress would exempt cable TV competitors from local franchise requirements, although allowing local governments to continue receiving franchise fees. In essence, companies like SBC and Verizon would need to negotiate one national franchise, with the fees filtering back to local governments. The bills also require new video providers to offer educational and public access TV channels, as cable providers have been required to do.

TV over IP, sometimes called IPTV, has the potential to bring multiple services to subscribers' TV sets, said Walter Mergura, general manager of broadband network solutions at Nortel Networks Corp., which sponsored an IPTV policy debate Wednesday in Washington, D.C. Consumers could receive voice, video and broadband Internet services over their TV sets, and TV programming could be linked to Web data so that viewers watching a cooking show could immediately download a recipe, he said.

As competition comes to the cable TV market, Congress should give new competitors similar regulatory breaks it gave to telecom competitors, said Brent Olson, SBC's assistant vice president for regulatory policy. In the case of video services, telecom carriers shouldn't have to negotiate thousands of franchising agreements to bring competition to the cable TV carriers, he said during the policy debate.

The four large incumbent telecom carriers -- often called the regional Bells -- have often fought against the telecom regulations they faced as former monopoly telephone service providers, and against their competitors receiving regulatory breaks. But now, as the regional Bells move into video, they argue the cable monopoly should be treated as they were in the past. "Incumbent regulations should not be applied to new entrants," Olson said, arguing for a national franchise agreement.

Cable TV providers have opposed efforts to exempt the Bells from local franchises, saying the telecom providers should have to jump through the same hoops as they had to. The 1996 Telecommunications Act already allowed the Bells to enter the video market, but they've taken years to do so, said Steve Berry, senior vice president for government relations at the National Cable Television Association, a trade group.

The Bells, among the largest companies in the world, don't need special breaks, Berry added. A steamlined franchising law would give the Bells a "unique competitive advantage to the largest telecommunications providers in the world," he said.

"You need to treat like services alike," Berry added. "There's no reason to give the telecommunications companies ... a break at this stage of the game."

Representative Rick Boucher, a Virginia Democrat, proposed a compromise during the discussion. Boucher, who supports a national franchise system, proposed that cable TV operators should also be able to use the national system instead of applying for many local franchises. At the same time, he rejected calls from the cable TV industry to require the telecom carriers to offer service to all customers in a local area, as cable companies have had to do.

With more than one provider of video services in an area, new competitors should be able to offer service where they see the best opportunities, and not where customers are unlikely to subscribe, Boucher said. "You might wind up with a lot of stranded investment if you had a [total] build-out requirement," he said.

Boucher also proposed companion legislation that would allow local governments to offer broadband service in competition with the Bells. "Maybe we ought to consider that law in conjunction with a national franchising law," he said. "Both the cable and the phone companies would get something and would give something up."

Verizon and SBC have lobbied for legislation to outlaw municipal broadband services, but SBC's Olson didn't raise objections to Boucher's compromise.

Copyright © 2005 IDG Communications, Inc.

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