Telcos Win a Battle, May Be Losing the War

Carl Weinschenk

The decision by the Federal Communications Commission to streamline the cable franchising process -- reported here at TMCnet -- clearly is a win for telephone companies and other providers that wish to compete with the cable industry.


An FCC ruling is the start. How this shakes out will be a major factor in how the convergence business evolves. Rules controlling the access of competitors to network facilities -- a topic of overwhelming complexity wrapped in a layer of stupefying dullness -- greatly influences, or even decides, the choices and prices for voice, video and data services.


The rules adopted by the FCC will require authorities to decide on franchise applications within 90 days for companies that already have right-of-way (i.e., incumbent phone companies) and within six months for organizations that don't. The new rules -- which commentators predict will be challenged in court -- include a number of other elements that will help competitors as they try to win franchises. None of this is good news for cable companies.


This is a bit more than half a loaf for the telcos. The bigger prize is uniform franchises awarded at the state or national level. Some states already grant such franchises. A win at the national level would free telcos and other competitors from dealing with local authorities altogether. Such an initiative was at play in Congress during the last session. However, it faltered -- at least on the House side -- when it was linked to to the Net Neutrality issue.


The telephone companies did as well as they could have hoped for. This may be their highpoint, however. The telcos are unlikely to get much relief from a Democratic congress. The same can be said for other nascent competitors who, whether they like it or not, are linked to the legacy carriers. These companies should be grateful that the FCC -- in a straight party-line vote in which three Republicans defeated two Democrats -- made their lives easier.


We are on the precipice of great competition between cable and telephone companies. In football, baseball or telecommunications, the ground rules under which the game is played go a long way toward determining the victor. During the next few months, it will be interesting to see if Congress is interested in grappling with the issue and if the expected legal challenges to the FCC ruling materialize.

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