U.S. court upholds new FCC video franchising rules

By Peter Kaplan

WASHINGTON (Reuters) - A U.S. appeals court on Friday handed a victory to new competitors in the subscription television business like Verizon Communications Inc (VZ.N: Quote, Profile, Research, Stock Buzz) and AT&T Inc (T.N: Quote, Profile, Research, Stock Buzz), upholding new federal rules designed to ease their entry into local communities.

The U.S. Court of Appeals for the Sixth Circuit in Cincinnati turned down a petition by cable operators and municipal officials seeking to overturn the new regulations adopted by the FCC in December.

A three-judge panel of the court concluded that the FCC acted reasonably and was within its authority when it adopted the new rules, which set time limits for local authorities to act on applications by new television providers.

AT&T and Verizon had complained that under previous rules the process to get licenses from local authorities was too cumbersome and time-consuming.

Under the new rules, local jurisdictions have 90 days to act on applications by new television providers that already have access to city land to run connections and 180 days for new entrants to cities and towns. They also bar local officials from imposing requirements on new entrants, such as building a local swimming pool, that the FCC said are unreasonable.

In the opinion released on Friday, the appeals court judges rejected arguments by local officials and the trade association representing cable operators such as Comcast Corp (CMCSA.O: Quote, Profile, Research, Stock Buzz) and Time Warner Cable (TWC.N: Quote, Profile, Research, Stock Buzz). They argued the FCC had overstepped its authority.

The court said there was "ample record evidence supporting the Commission's finding that the operation of the franchising process had impeded competitive entry in multiple ways."

FCC Chairman Kevin Martin praised the decision, saying it would "ensure that new competitors to cable are not subjected to unreasonable delays, build-out requirements and fees when trying to compete with the incumbent cable operators."