California passes bill easing cable rules

Bill eliminating city-by-city franchises aims to increase competition with cable providers. Telecoms pleased.

California's legislature passed a bill on Thursday night aimed at increasing competition among cable television providers and easing the ability of telephone companies to enter the market.

The state's Assembly by a vote of 64 to 5 backed an amended bill passed by the California Senate the night before. The Assembly had approved an earlier version of the legislation in May.

"California has led the way in the evolution of new technology, and with this bill, our state's policy toward contemporary TV and entertainment technology is catching up to the times," Assembly Speaker Fabian Nunez, who has championed the legislation, said in statement.

The measure, passed ahead of a midnight deadline for new bills, still needs the signature of California Gov. Arnold Schwarzenegger to become law.

The bill eliminates city-by-city franchises, which Nunez said made it nearly impossible for rivals with new technologies to enter California's market for TV entertainment services.

According to an analyses by the state Senate's Rules Committee, 63 percent of California TV-watching households have cable reception, 27 percent subscribe to satellite service and the rest use conventional antennae.

Telecoms to gain
Telephone companies including AT&T have lobbied to eliminate laws requiring franchise deals with municipalities before they may offer television service. Verizon Communications already offers television service in six California cities.

AT&T plans to invest up to $1 billion in California through the end of 2008 to upgrade its telephone network in the state and to launch an Internet Protocol video entertainment service, which would compete with services offered by cable TV companies.

The California legislation comes as lawmakers in Washington, D.C., are considering a bill that would make it easier for telephone companies to get licenses for cable television service. Yet, Congress has a short calendar this year and may not act.

Other states, including Texas, have passed similar legislation making the licensing process simpler. If Congress does not act, analysts expect other states to follow Texas' and California's lead.

Telephone and cable companies are fighting to sign up as many customers as possible for a bundle of services including telephone, cable television and high-speed Internet access, which often cost more than $100 a month.

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