Broadband's Buzzwords

The difference between my cable company and my telephone company has become a bit blurry. My cable provider wants me to drop my phone company...
by | February 28, 2007

The difference between my cable company and my telephone company has become a bit blurry. My cable provider wants me to drop my phone company and use its network for voice communications. My telephone company wants me to use its fiber-optic network for television programming. And each wants my business for broadband Internet access.

Both sides of the telecommunication industry are tugging at policy makers, too, particularly when it comes to overhauling the municipal franchising system long used to govern local cable TV operators. Despite a lot of talk about that issue in Washington last year, the states have become key players. By the end of 2006, nine states, from California to New Jersey, had enacted laws that will change the way telecom companies do business with local governments. More are considering such measures this year.

Simplifying the video franchising process to increase competition is no easy task, especially when the terminology is daunting. So here is a guide to some of the broadband buzzwords on which this year's legislative debates may hinge.

State Franchising: The franchising laws enacted so far establish statewide decision-making processes that supersede the way municipal authorities grant franchises for video service providers in particular areas. In general, the new agreements still include the franchising fees that are paid to local government, as well as other obligations, such as access to channels for public, educational and government (PEG) programming. But the statewide regulatory schemes also accelerate decision making and often put limits on what localities can ask for.

Opt-in Provisions: The "incumbent" franchise holders -- cable companies -- worry that "new entrants" in state and local video markets will get an unfair advantage under the new rules. So laws in some states allow existing local franchise holders to get out of those agreements and opt into the new scheme.

Related Links

· Congressional Research Service overviews of broadband regulatory issues and net neutrality

· Local government groups' positions on video franchising, telecommunications law and telecommunications taxation

· National League of Cities primer on video franchising

· Cable industry's views on video franchising, competition and net neutrality

· Verizon executive's speech on broadband issues and a company statement on net neutrality legislation

· Consumer groups' report on

href="">net neutrality and congressional testimony on broadband policy

Build-out or Service Availability Requirements: These rules require broadband providers to offer their services throughout any community in which they want to do business -- not just in the areas where they think they can collect the most profits. The cable industry supports these policies, which they like to call "anti-discrimination requirements." That position has political as well as competitive advantages, since it aligns the cable operators with many state and municipal officials, who argue that build-out rules are needed to guarantee that all citizens get the socioeconomic and educational benefits of broadband access. The phone companies say they support the goals of these requirements but complain that specific build-out rules deny them needed time and flexibility to extend their services economically. They also say concerns about "redlining" broadband services are unfounded.

Municipal Broadband: Some local governments have taken a different approach to closing the digital divide by announcing plans to offer their own low-cost broadband services -- such as the much-publicized citywide wireless, or WiFi, network that Philadelphia is building. These plans have prompted debate at all levels of government about whether the public sector belongs in the broadband business at all, and some states have passed measures to limit, if not prohibit, such ventures if they compete with commercial services. Congress is expected to weigh in on this debate with legislation that would preempt any state restrictions on these projects.

Net Neutrality or Internet Regulation: This issue helped derail national telecom legislation in Congress last year, in part because cable and phone companies were generally united against it. A net neutrality policy would require Internet providers to treat all kinds of data on their networks equally, including features offered by competitors. Consumer groups and some high-traffic Internet companies (such as Google and eBay) say this would guarantee that customers have unfettered access to any lawful online content or service. Telecom companies argue that any such "Internet regulation" would make it difficult for them to recover the cost of building, maintaining and extending their data networks. Moreover, the industry does not believe states have any say on net neutrality, both for legal as well as technical reasons. Proposed neutrality policies have been debated -- but not enacted -- at the state level, and the issue is sure to resurface.

So who will come out ahead in these areas? Based on the terms of the debate so far, and the money all sides are throwing around to make their case, there seems to be one clear winner: the lobbyists.


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