House Dems Blast FCC for Cable TV 'Legislating'

At the end of 2006, the FCC -- led by Commissioner Kevin Martin -- approved in a 3-2 vote new video franchising rules designed to increase competition in the cable industry. Included among the new rules are a requirement that local governments speed up the approval process for new cable competitors; a cap on the fees paid by new competitors; and an easing of the requirements that competitors build systems that reach every home.

Questions Galore

Rep. John Dingell, D-Mich., who heads the House Commerce Committee overseeing the FCC, reportedly said that he supports competition and lower prices, but noted that "the commission must work entirely within the existing laws to achieve that goal." In this case, he added, "the commission chose to ignore the well-settled divisions of responsibility."

The House Commerce Committee also questioned the FCC about rural access to broadband services, the backlog of complaints on the "do not call" phone registry, and whether it will enforce conditions on the merger between AT&T (NYSE: T) and BellSouth (NYSE: BLS) . In addition, the FCC had to answer questions about the status of upgrades to emergency communications and allegations that the National Security Agency has acquired telephone companies' private customer phone records.

Part of the Process

This kind of grilling is a "natural tug and pull, and not necessarily a bad thing," Gerry Kaufhold, principal analyst with In-Stat, told the E-Commerce Times. "Dialogue between the FCC and Congress is a regular thing, so that if Congress thinks something should change, it can enact the necessary legislation."

In fact, many of the cable issues in question date back several decades, Kaufhold pointed out. After the cable companies spent many years and billions of dollars setting up their services, the FCC has begun pushing for the implementation of digital cable-ready TVs that would do away with the industry's traditional use of set-top boxes -- a move that could make it harder for the cable companies to continue to innovate, Kaufhold said.

'Clash of the Titans'

Meanwhile, new competitors such as Verizon and AT&T, which seek to offer fiber-optic FiOS services, may be effectively exempted from many of the set-up requirements the cable companies originally went through.

The result is a battle between those who favor protections for the original cable companies and those who believe new competitors should be assisted in the name of increased competition and better customer service.

"It's like the clash of the titans, and the FCC is caught in middle of this vortex," Kaufhold explained. "Congress has to jump in and make a decision."