Tuesday, March 06, 2007

FCC rules local governments cannot impose build out requirements on telcos

The Federal Communications Commission has adopted a ruling that bars local governments from imposing "unreasonable" requirements on telephone companies seeking franchises to offer enhanced broadband-based video services. That includes requiring telcos serve areas designated by the local government in order to avoid the formation of broadband black holes where service isn't available because a telco doesn't want to make the necessary investment in infrastructure.

Here's a relevant excerpt from the 109-page order:

32. The record demonstrates that build-out requirements can substantially reduce competitive entry. Numerous commenters urge the Commission to prohibit LFAs from imposing any build-out requirements, and particularly universal build-out requirements. They argue that imposition of such mandates, rather than resulting in the increased service throughout the franchise area that LFAs desire, will cause potential new entrants to simply refrain from entering the market at all. They argue that even build-out provisions that do not require deployment throughout an entire franchise area may prevent a prospective new entrant from offering service.

33. The record contains numerous examples of build-out requirements at the local level that resulted in delayed entry, no entry, or failed entry. A consortium of California communities demanded that Verizon build out to every household in each community before Verizon would be allowed to offer service to any community, even though large parts of the communities fell outside of Verizon’s telephone service area. Furthermore, Qwest has withdrawn franchise applications in eight communities due to build-out requirements. In each case, Qwest determined that entering into a franchise agreement that mandates universal build-out would not be economically feasible.

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