Lawyer Article

Published in the November 15, 2005 issue of Southeast Tech Wire.

Section 621(a)(1) of the Communications Act grants franchise authorities the power to award franchises, prohibits exclusive franchises and prohibits franchise authorities from unreasonably refusing to award an additional competitive franchise. The Commission has now adopted a Notice of Proposed Rulemaking (“NPRM”), the purpose of which is to examine its role in ensuring that franchise authorities operate consistent with their obligations under the Act.

The Commission made several tentative conclusions on which it seeks comment. For example, it has tentatively concluded that:

• Section 621(a)(1) should be interpreted to prohibit not just the ultimate refusal to award a franchise, but also a broader range of behaviors. 

It is not unreasonable for franchise authorities to:

• “assure that access to cable service is not denied to any group of potential residential cable subscribers because of the income of the residents of the local area in which such group resides;”
• “allow [a] cable system a reasonable period of time to become capable of providing cable service to all households in the franchise area;”
• “require adequate assurance that the cable operator will provide adequate public, educational and governmental access channel capacity, facilities, or financial support."

 The NPRM seeks information on a number of issues. For example, it:

• questions whether franchise authorities are unreasonably refusing to grant competitive franchises;
• inquires about problems cable incumbents have encountered with franchise authorities; and
• questions how it can best ensure that the local franchising process is not inhibiting the ability of incumbent cable operators to invest in broadband services.  

The Commission also seeks input on the larger issue of its authority to regulate in this arena, tentatively concluding that not only does it possess such authority, but that it may deem preempted any law or regulation of a state or franchise authority that causes an unreasonable refusal to award a competitive franchise in contravention of Section 621(a). The issue of its authority to act is a significant one since the Act does not explicitly require the Commission to regulate in this arena. Additionally, Section 621(a) grants to applicants who have been denied a second franchise the right to appeal such denial in either state or federal court.

The foregoing is just a summary of the Commission’s action. The NPRM itself has not yet been released and comment and reply comment deadlines have yet to be established.

We will keep you updated with any developments. In the meantime, please call Mark Palchick (email; (202) 857-4411) or Howard Barr if you have any questions or comments.