Verizon: Rules Schmules > A letter from the front lines...

A letter from the front lines...

As posted elsewhere, franchise agreements rarely give a cable operator exclusivity, as witnessed by the multiple providers in many larger metros (I have a choice of RCN or Comcast for example).
Whats a stake here is the clause that forces Verizon to provide UNIVERSAL coverage in the towns they deploy to.
noz

reply to gwion

quote:

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That's all the franchise rules are, contractual provisions in the franchise agreement that grant exclusivity...

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reply to gwion
If you read the fine print, most of the franchise agreements negotiated with the small and medium sized municipalities prior to 1993 have an exclusivity provision -- and an option to the provider to renew. Larger cities tend to have better solicitors and real law departments, so they had this advantage before 1993. They also tend to be more aggressive. My experience was largely with boroughs and townships, not cities... and, in many... not all, I grant... but many cases, and you had to look for them, they slipped in a provision stating that the franchise was a grant of an exclusive right to provide cable services in that community.

There's a reason more recent contracts don't have these provisions, and it's not cableco fairness... During the early 90's, these provisions were common, albeit sometimes buried in the boilerplate of a twenty page contract. That was probably because they anticipated the Cable Act of 1992, 47 U.S.C. § 541(a)(1), which stated, in relevant part, "a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to award an additional competitive franchise." --- actually, now, the shoe's on the other foot -- and the options to renew are granted to the cableco, if they can get their way. And the typical franchise is prepared by their lawyers, not the community's lawyers or representatives. And it usually contains, again, if they get their way, a "most favored nation" clause (more on that, below).. Most of the agreements are for ~10 years... often more; sometimes decades. Hence, what it was was a rush to the door before it was locked, in anticipation that the Cable Act would pass. For a nicely written Sixth Circuit opinion elaborating, see: »caselaw.lp.findlaw.com/cgi-bin/g···=950003p But see also Preferred Comm., Inc. v. City of L.A., 754 F.2d 1396 (9th Cir. 1985) (holding exclusive cable franchises unconstitutional), aff'd on other grounds, 476 U.S. 488 (1986)

I said I hadn't done this in a while... -- it takes me a while to refresh my somewhat foggy memory and synthesize all this new info. I probably should have addressed the ILEC provisions, since that's more relevant than the newer agreements, but remember that a lot of the current agreements in the smaller communities are grandfathered, optioned renewals from 1990 or before. Curiously, a lot of the really old agreements, from the 70's, didn't have exclusivity clauses, and were very favorable to the municipalities. Whether for marketing purposes to get a foot in the door or whatever, didn't matter, it was highly desirable, usually, to find a renewal option in the community's hands and use it, on those, wherever possible. That usually infuriated the CTV co GM's and lawyers.

Now, here's the question left in my ever-devious mind ... is IPTV "cable service", within the meaning of the FCC's definition, and the terms of the franchise agreements in force?

And in another musing, if it is, would it be subject to the "most favored nation" clauses, that require essentially the same terms as in the favored provider's franchise in all subsequently granted franchises?

Finally, assuming the question's open regarding whether it's "cable" or not, would the FCC's ILEC waiver process be required to provide such services in Verizon, or any ILEC providing broadband's, POTS service areas?

There are a lot of questions that cross my mind, and, as I say, I'm rusty... there's a lot of regulation and material on these issues, and a lot of various contractual provisions are in effect in various areas. Most of the big cablecos inherited franchises, to complicate matters, as they absorbed all those small operations that used to dot the landscape, back in the early days of cable. Meaning the big operators don't necessarily have "one" contract with all their areas... and some towns have more leverage than others, and negotiate new agreements, others sign whatever's offered, others exercise renewal options. Where we are right now is on relatively new ground. The line between cable and internet services is slowly eroding. What I'm in favor of is as much competition as possible, everywhere it's feasible. There will probably always be de facto monopolies, in this "best of all possible worlds," simply because some areas are so small or so poorly saturated with subscribers per mile that -- being brutally frank -- they're lucky anybody serves them at all... but for the rest of America, not all of whom live in NYC or Pittsburgh or Boston or LA or even Peoria, where there are negotiated options and multiple competing providers, and not all of whom have the skill or the resources to follow the lead of those urban centers, an option to have delivery via telco fiber, whether it's provided by the ILEC or another provider (I don't care; long as it's available, who provides it isn't an agenda of mine - like I said, above, I've never been in the employ or biased towards telcos or any other commercial enterprise, in this, just municipalities and citizen groups) is a positive step towards the future of technology and a positive step for competition.

... and I didn't even have time or space to address the issue of those poor sods who live three miles out, on the edge of town, 1.2 families per linear mile, and can't be served under the franchise terms -- but they may just have broadband or fiber... well... next time...

PS- yes, that universal service catch... but that's a common carrier concept. There's a raging debate over this, right now... the big RBOC's want services provided by internet over telephone lines via telco provided DSL to be treated outside of the common carriage rules, in effect, be saved by deregulation - the smaller telcos, cablecos and others want to be, as one commentator put it, saved "from" deregulation... common carrier regs are meant to serve a number of purposes. I've never really thought that they should be applied to non-POTS services, myself. Not on a philosophical reasoning, but on a legislative intent reasoning... they never contemplated these services in writing the common carriage provisions. Ironically, I'm echoing the RBOC argument. But for a different reason. I think the communications act is a lot like the tax law. It needs tossed out the window and rewritten, top to bottom, to reflect the new era in communications, not convoluted to make it fit the new era. It was written for an era when cable was cable, POTS was POTS, and consumer high speed internet over cable or phone lines wasn't even a twinkle in somebody's eye. With convergence come new issues; and it's now predictable that any number of concurrent services can be provided over these systems.

And when fiber becomes universal... and it will, it's not an internet technology, it's a carrier medium, and the future of communications... a lot of these growing pains will be mooted. The future of communications is convergence. The end game is whose lines it converges over. My money's on the telecoms. They simply do this stuff better, as a general rule. But however it works out, the simple reality for the next decade is that copper is dead. Fiber's obsolesced it, for all practical purposes. Barring a major tech development and shift, it's not whether, it's when.

Enough of my rambles... and we're just scratching the surface... this has already become a little on the ... ... long and boring side ... sorry. Just that I'm really thinking it out, right now, myself, and it's really not a simple analysis, at all, as I see it.

PPS - wow... and I should have said "early 90's and late 80's," above... ye gads, time flies. Seems like yesterday morning, sometimes... amazing, though, how far we've come. Back then, we just dreamed of having problems like these... because that meant things were progressing... always look at the bright side, right?

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Semper Eadem


-"Tewdor Thunder"-