SENATOR STEVENS OPENING STATEMENT
VIDEO FRANCHISE HEARING
FEBRUARY 15, 2006
If there is no disagreement we will have opening statements of not more than five minutes and then we’ll listen to Ms. Blackburn and then go to our witnesses as quickly as possible. I have a short statement.
As different industries begin to emerge into each other’s space, it is the consumer who is poised to win.
First it was cable providers offering phone service. Now Americans see wireline phone providers eager to offer video service.
As traditional communications providers move into new services bringing choice, innovation and lower prices to consumers, Congress is confronted with reexamining our legacy regulations.
This Committee has scheduled a series of hearings on communications issues this session through March, about the middle of March. Including this hearing today, this Committee has had eight hearings so far. As with all of our hearings, I look forward to working with the interested parties and the members of this Committee to craft fair and even-handed legislation for the digital communications world that’s expanding far beyond our rules. It’s going to take a lot of patience and a lot of understanding to get a bill.
Chairman Stevens Q&A with Witnesses
Chairman Stevens: Let me start off by asking Mr. Seidenberg, how long has it taken you so far on an average to get a franchise?
Mr. Seidenberg: It varies, Senator, but it’s at least a year, up to 14,15 months in some cases.
Chairman Stevens: For each one?
Mr. Seidenberg: Some we’re not even encouraged to file because the municipalities see that there is going to be controversy, there’s going to be issues, so they tell us not to file. So, we have a lot in queue that we haven’t even filed yet. If I added that to the time period, I can tell you that the process is 18 to 24 months easily.
Chairman Stevens: Mr. Whitacre, does the timeframe affect your decision as to whether you should enter a particular market in terms of this transition?
Mr. Whitacre: Yes it does. As you know we’re doing IPTV, which is a little different than Mr. Seidenberg’s company is doing it. Technology is just now getting there, but of course. And we plan to cover like three million households by the end of the year. But, certainly it impacts that and you know we’re reluctant – you have to slow down when this franchise thing is hanging over you, so we’re getting started. We hope it gets resolved so that we don’t really face that in other states.
Chairman Stevens: Mr. Rutledge, I listened carefully to your statement. My memory is that when cable television entered the telephone business as a competitive local exchange carrier, Congress gave you the right with special rules, no build-out requirement, and little regulation. Now, why shouldn’t that same thing apply to the telephone companies as they come now into your market?
Mr. Rutledge: Well, I think that the difference CLEC situation and the cable situation is that you have an existing network operator, both of these companies are bigger than the entire cable industry, very large franchised or regulated public utility companies that have existing rights-of-way and existing networks. They’re talking about upgrading their networks. The CLECs that were created around the country were new industries, new businesses that had no existing infrastructure, so it’s a completely different situation. With regard to Voice-over IP though, the rules are the same for both industries today – the phone industry can provide Voice-over IP under the same conditions that cable operators can. Our company actually is a CLEC operator. We created a CLEC in the mid-90s and we filed tariffs with the states that we operate in and created a business that primarily served businesses not residential consumers.
Chairman Stevens: You’re telling me that fair is not fair?
Mr. Rutledge: Pardon me.
Chairman Stevens: You’re telling me that fair is not fair, that the same privileges should not be given to telephone to enter your business as you have to enter theirs?
Mr. Rutledge: I don’t think it is fair. I think that to allow the phone companies to cherry-pick where they are going to put video, which I think is the real issue here. They want to serve only limited parts of communities. That’s a very unfair thing for an existing, entrenched operator to have that opportunity, whereas we have just gone through a $100 billion upgrade process and built out our entire network to all parts of the community.
Chairman Stevens: Thank you. I want to live with my own timeframe if you don’t mind. Ok? Ms. Tillery, I understand what you’re saying, but do you really think a local community should be able to say, “A communications company should upgrade traffic signals, put flowers along the highway.” Shouldn’t there be some limits as to what a community can ask for as a secondary benefit after they get their fee for issuing a franchise?
Ms. Panzino-Tillery: There are limits, Mr. Chairman.
Chairman Stevens: What are the limits?
Ms. Panzino-Tillery: Well, Title VI claims that only those replacements should have a direct connection to the provision of the cable service. So, upgrading…
Chairman Stevens: You’re saying we need a traffic cop.
Ms. Panzino-Tillery: Well, upgrading of street lights…
Chairman Stevens: You heard Mr. Seidenberg. What they’ve been asked for. Do you think that’s fair?
Ms. Panzino-Tillery: I don’t necessarily agree with his comments, Mr. Chairman.
Chairman Stevens: You don’t agree that he’s been asked for all of these subsidiary things that have nothing to do with communications in order to get a franchise?
Ms. Panzino-Tillery: Not necessarily.
Chairman Stevens: Alright, thank you. My last question, Mr. Riddle, Public Education in Government, PEG channels, I do appreciate your statement and we’ve known each other a long time, why should a community be able to ask for as many as 14, 15 PEG channels when New York only has four?
Mr. Riddle: Well, it’s ironic, I used to work in New York and actually four in New York was wholly inadequate and that was only the public access channels.
Chairman Stevens: Shouldn’t there be some limit? That section didn’t mean you could keep going and ask for more and more and more from one provider, did it?
Mr. Riddle: No, generally there are limits that are agreed to. But I would like to point out…
Chairman Stevens: Would you mind if we put limits on?
Mr. Riddle: Well, no I don’t think that that would be a problem as long as the recognized that the systems change and that the percentage of public bandwidth remained essentially the same as the system changed, so that the public wouldn’t be cut out of technological change and system growth.
Chairman Stevens: I’m going to yield to Senator Inouye. I do hope, each of us has one or two specific questions. If you don’t mind could we submit them to you and have you respond to us so we can stay within the time and we can all end up by going to lunch sometime today.
Chairman Stevens Closing Statement
I feel compelled to tell you where I’m coming from. You know, I’m from Alaska a place that is roughly the size of Italy, Germany, France, and Spain. We have now after 10 years of the ’96 Act, through tele-education and the availability of some Universal Service funds, computer capability at 90 percent for the whole State. But, we have 100 villages that don’t have Internet at all. And when we go make a reservation for a U.S. hotel, we’re probably going to talk to someone in India. Why? Because they have high-speed broadband connections and they have satellite connections, but they have a workforce there that is enjoying a quality of life that our people don’t get. And, they don’t get it because they don’t have access to the systems we are talking about now. I see no reason why those small villages in Alaska couldn’t be performing some of these functions for American companies if they had access to these systems. So, while I’m here and my friend from Hawaii has similar problems – his state has an even larger area than mine – we want to help everyone of you in what you’re talking about in building out the cities and the areas of what we call the South-48, but I hope you won’t forget the problems we have in Alaska and Hawaii. We’ll be in touch with you about those. Thank you all very much.
Daniel K. InouyeSenator
This morning, the Committee turns its attention to video competition and our current framework under the Communications Act for regulating the provision of cable services to consumers.
In some respects, today’s discussion returns the committee to familiar ground. Over a decade ago, members of this committee heard similar testimony from witnesses who explained how new technology would allow cable companies to provide telephone service; telephone companies to provide cable service; and consumers to reap the benefits of this competition. While this promised competition did not emerge as rapidly as we once hoped, further advances in technology and new competitive realities are increasingly driving traditional telephone companies to enter the video services market.
As a result, these developments lead us back to an all-too-familiar question – namely, what changes to our communications laws, if any, are needed to promote fair competition and to protect consumers in the video services market?
Toward that end, as we begin to think about legislative proposals to promote robust video competition, there are certain fundamental principles that should guide us in this debate. These principles are not Republican or Democratic principles, but rather, are bipartisan and pragmatic. That is why I was pleased to join with my colleague Senator Burns earlier this month, in bringing these ideas into the debate.
First, our laws should promote competition and ensure speedy entry on fair grounds. The process for obtaining a franchise should be expeditious and should not be used to frustrate entry. But in addition to procedural fairness, a government franchise to provide video services must also ensure that new operators deal fairly with the communities they serve.
Second, our laws should strive to regulate providers of video services in a competitively neutral manner. Whether a video service is called a “cable service,” “IPTV,” or is based on some other type of technology, the regime for regulating these types of services -- where the provider controls the content included in the service offering -- should be consistent.
Third, our regulatory framework should recognize the significant role that states and localities play in tailoring the obligations of video service providers to the needs of particular communities, and in enforcing such obligations. As we have seen since the beginnings of the cable industry, this historic reliance on state or local authorities to manage public rights-of-way and to protect the public interest has played an essential role in preserving localism.
In my view, our efforts to facilitate fair and robust video competition, to strengthen universal service, and to ensure network neutrality, will represent the central elements of telecommunications reform. And so, I look forward to listening to today’s testimony and to working with my colleagues in the weeks ahead.
And I thank you very much Mr. Chairman.
Witness Panel 1
Congresswoman Marsha Blackburn (R-Texas)
Witness Panel 2
Mr. Ivan SeidenbergChief Executive OfficerVerizon Communications
Mr. Edward E. Whitacre, Jr.Chairman and Chief Executive OfficerAT&T
Mr. Tom RutledgeChief Executive OfficerCablevision Systems Corporation
Ms. Lori Panzino-TilleryPresidentNational Association of Telecommunications Officers and Advisors
Mr. Brad EvansChief Executive OfficerCavalier Telephone
Mr. Anthony T. RiddleExecutive DirectorAlliance for Community Media
Mr. Gene KimmelmanVice President for Federal and International AffairsConsumers Union
Ms. Gigi B. SohnPresident and Co-FounderPublic Knowledge