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Congress Moves on National TV Franchising

The U.S. House lawmakers have agreed in principle to award national cable franchises to phone companies and to subject cable operators to continued local franchising requirements until phone rivals have reached 15 percent local video market penetration, according to industry and Capitol Hill aides.

The agreement was reached by House Energy and Commerce Committee chairman Joe Barton (R-Texas), Telecommunications and the Internet Subcommittee chairman Fred Upton (R-Mich.) and Reps. Chip Pickering (R-Miss.), John Dingell (D-Mich.) and Edward Markey (D-Mass.), the sources said.

AT&T Inc. and Verizon Communications Inc. have been urging Congress to adopt a national-franchise policy, but the agreement includes provisions that have not been publicly debated. Senate Commerce Committee chairman Ted Stevens (R-Alaska) is expected to unveil a bill soon that is expected to include cable-franchising relief for the large phone companies.

Under the House agreement, one provision would withhold regulatory relief from cable until the phone company had secured 15 percent of a local video market. Under current law, cable operators are price-deregulated on the basic tier when pay TV competitors are serving more than 15 percent of local households.

A second provision would protect phone companies from predatory-pricing tactics by cable incumbents. As explained by sources, if the cable company cut its rates to meet or beat phone-company video prices, the cable company would be required to make the price cuts available to its entire local subscriber base, not just those homes served or capable of being served by the local phone company.

Under current law, regulated cable operators are required to offer a uniform rate structure in a local market. This requirement is eliminated when competitors have met the 15 percent penetration test.

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