California became the seventh state in the nation to pass a state-wide franchising bill yesterday, a move that will speed the entry of phone companies into the video business. AB 2987, “The Digital Infrastructure and Video Competition Act of 2006,” was passed by by the California Senate on a 33 to 4 vote and will now go back to the Assembly for concurrence and then to the Governor’s office for consideration. Governor Arnold Schwarzenegger is expected to sign the bill as early as today.
Unlike most other state-wide franchising initiatives (Virginia’s legislation is the other possible exception), this bill received the backing of both cable and phone companies due to compromises that ease franchising burdens for cable operators and allow them to enjoy the benefits of state-wide franchising once telco competition has set in. The cities, on the other hand, are not happy, even though they get to keep their 5% franchise fees.
They fear, among other things, that the state legislature will take away their franchise fee revenues if California hits another financial crisis. In an 11th hour bid to derail the bill, the state’s cities warned that the legislation, which doesn’t mandate build-outs for telcos once they enter a community, will result in red-lining or denial of advanced communication service deployments in poor or rural areas.
The happiest campers are, of course, the phone companies — AT&T, the biggest telco in the state, reportedly spent around $18 million to get the bill passed. With the burden of community-by-community franchise negotiations lifted, AT&T and Verizon, the other major telco in the state, have promised stepped-up roll-outs of triple-play services.
Cynthia Brumfield at 9:14 AM|Comments(0)
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