U.S. court upholds new FCC video franchising rules

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 and AT&T Inc T.N, 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 and Time Warner Cable TWC.N. 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.”

“Consumers need greater choice and more competition to help address the soaring price of cable television,” Martin said.

Verizon and AT&T also lauded the decision. “The FCC decision was pro-consumer and pro-competition and encouraged the deployment of bigger and smarter broadband networks across our nation’s communities. We are heartened that the FCC’s decision was upheld,” AT&T senior vice president Robert Quinn said in a statement.

The decision was met with a muted response from the cable industry. Its trade association, the National Cable & Telecommunications Association, said the new rules had been made more palatable through a measure subsequently adopted by the FCC.

The cable association said the market for video service “is intensely competitive and consumers are enjoying more choice, more services and better value than ever before.”

Editing by Brian Moss, editing by Phil Berlowitz