Compromise legislation reshapes competition for video services

by Paul T. Miller Jr.
for Virginia Business
July 2006

Before there were personal computers … Before there were cell phones … Long before cable television became pervasive … there was Light Amplification by Stimulated Emission of Radiation. We know it today as simply the laser, and Bell Labs touted its promise to anyone who would listen.

Theoretically, thousands of phone calls could be carried at the same time on a tiny laser beam. But, as engineers quickly learned, this gee-whiz technology had its limitations. Calls could be disrupted and even dropped if birds or clouds or smoke got in the way.

So, scientists devised a way to shoot pulsating laser beams through hair-thin strands of glass. A cable of these strands, roughly the diameter of a pencil, boasts incredible bandwidth. It is this fiber-optic technology that telecommunications companies want to bring to homes to feed our growing broadband appetites.

The Virginia General Assembly passed a landmark bill in its last session that should help satisfy some of those appetites. The law, which took effect this month, will grease the skids for wireline telephone companies to roll out video services. (Wireline phone companies provide traditional phone service, as opposed to cellular or wireless service.)

Phone companies have been relatively slow to launch cable TV, despite a 10-year-old federal law that allows them to do so. They complain it’s unwieldy to have to negotiate franchise agreements with each and every municipal government. Virginia has more than 3,600 counties, cities and towns. Some, like Clifton in Northern Virginia, are home to only a few hundred souls.

The new law, Virginia’s Cable Competition Speed of Entry Act of 2006, preserves local franchising but sets limitations on localities to help jumpstart entry of new competitors.

The law essentially grandfathers the existing video franchises of Verizon Virginia, the state’s largest wireline phone company. Those franchises are with Fairfax County, Fairfax City, Falls Church, Herndon and the military bases at Fort Belvoir and Quantico.

The commonwealth’s new cable act had been in the making for several years. Verizon initially sought legislation that would eliminate any and all requirements to negotiate franchises with localities, making it much easier to enter markets.

Cable companies, however, lobbied aggressively against the bills, contending that such legislation would give phone companies an unfair advantage. After all, cable providers say, they had to negotiate with each municipality. Why shouldn’t the phone companies be required to do the same?

“ When companies operate under the same rules, they’ll duke it out with each other and consumers will benefit,” says Ray LaMura, president of the Virginia Cable Telecommunications Association.

Robert Woltz, president of Verizon Virginia, doesn’t necessarily agree with LaMura’s definition of a level playing field. Yet, he said in a company statement that, “Consumers win when landline companies compete for video services in the same market.”

Like most laws, the Cable Competition Speed of Entry Act is a compromise. Neither the cable companies nor the phone companies are totally happy. But that may be good. Perhaps, this means consumers will be happy.

Meanwhile, Congress is hotly debating a bill that would reform the federal Cable Act of 1996. Legislation passed by the House would replace local franchises with a national system supervised by the Federal Communications Commission. Whatever the outcome, the two converging industries will likely “duke it out” in the commonwealth sooner as opposed to later.

Stay tuned, cable junkies.

Paul Miller, a retired Verizon public relations executive, is a freelance writer and owner of Paul Miller Public Relations.