The Commission concluded that the current operation of the franchising process constitutes an unreasonable barrier to entry that impedes the achievement of the interrelated federal goals of enhanced cable competition and accelerated broadband deployment.
In its Report and Order and Further Notice of Proposed Rulemaking just released, the FCC addresses several ways by which local franchising authorities are unreasonably refusing to award competitive franchises. These include drawn-out local negotiations with no time limits; unreasonable build-out requirements; unreasonable requests for "in-kind" payments that attempt to subvert the five percent cap on franchise fees; and unreasonable demands with respect to public, educational and government access (or "PEG").
To eliminate the unreasonable barriers to entry into the cable market, and to encourage investment in broadband facilities, the Commission:
* Found that franchising negotiations that extend beyond certain time frames amount to an unreasonable refusal to award a competitive franchise within the meaning of Section
621(a)(1);
* Found that requiring an applicant to agree to unreasonable build-out requirements constitutes an unreasonable refusal to award a competitive franchise;
* Found that, unless certain specified costs, fees, and other compensation required by local franchising authorities are counted toward the statutory five percent cap on franchise
fees, demanding them could result in an unreasonable refusal to award a competitive franchise;
* Found that it would be an unreasonable refusal to award a competitive franchise if the local franchising authority denied an application based on a new entrant's refusal to undertake certain unreasonable obligations relating to public, educational, and
governmental ("PEG") and institutional networks ("I-Nets"); and
* Preempted local laws, regulations, and requirements, including local level-playing-field provisions, to the extent they impose greater restrictions on market entry than the rules
adopted herein.
The Commission concluded that although the record allows it to determine generally what constitutes an "unreasonable refusal to award an additional competitive franchise" at the local level, the Commission does not have sufficient information to make such
determinations with respect to franchising decisions made at the state level or in compliance with state statutory directives, such as statewide franchising decisions. As a result, the Order addresses only decisions made by county- or municipal-level franchising authorities.
