Sunday, May 06, 2007

Will Comcast seek California state charter?

As demand for broadband Internet access grows, California municipalities and counties will invariably find themselves under pressure to amend franchise agreements with cable companies like Comcast to require them to extend service to neighborhoods lacking cable access. Even areas where AT&T and other telcos provide broadband via Digital Subscriber Line (DSL) could clamor for cable service since it offers a proven bundle of television and Internet access at speeds higher than DSL.

But if they do, will Comcast and other cable providers tell California local governments to take a hike and opt to obtain a statewide franchise under legislation that took effect earlier this year, the Digital Infrastructure and Video Competition Act of 2006?

Enacted last year as AB 2987, the law allows both cable and telephone companies to bypass local governments and instead obtain authority to offer video-capable broadband through franchises issued by the California Public Utilities Commission (CPUC). But AB 2987 also allows cable companies to operate under existing local government franchise agreements if they choose. So far, Comcast is doing just that and has not applied for a statewide franchise from the CPUC. (To date, only one cable provider, Cox Communications, has applied for a statewide franchise.)

If enough California local governments pressure Comcast to build out its cable plant to provide service to more neighborhoods, Comcast could well opt for a state charter under AB 2987. The reason: the law has very limited build out requirements that require providers serve only half of their regional service areas by 2012. Opting for a statewide franchise would provide Comcast and other cable providers an easy exit from local political pressure to expand broadband access.

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