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FCC oversteps bounds Ruling eases way to a competition that may hurt more than it helps

Competition is good for consumers, but a recent decision by the Federal Communications Commission to help smooth the way for the telephone industry's entry into video is questionable.

In a 3-2 vote, the FCC moved to speed the local review process for phone company requests for a video franchise. Although the FCC will not force municipalities to grant phone companies such franchises, the new rule does require a decision within 90 days from the beginning of franchise negotiations.

Any competition for consumers would be muted at best, rooted not so much in price but in the bundles of services competitors would offer -- and which most consumers don't purchase. While the benefits for consumers are murky, the cost would be substantial.

Jeff Kagan, a telecom industry analyst, said the Baby Bells still have to upgrade their networks so this will not be an instant change. But the ruling clears the way for phone companies to go head-to-head with cable television companies over video.

What the FCC has done in its decision is significant. Local franchising authorities, generally municipalities, bargain for service provisions that meet community needs, including institutional networks for police, fire, ambulance, libraries and school buildings. Those institutional networks are important for the purpose of providing local public services.

The FCC decision represents an assault on the ability of local governments to provide those functions. Truncating the review and bargaining period hinders the ability to pair community service with consumer marketing. For private industry, resistance is natural because meeting social obligations can prove costly; for example, one important social issue involves the costly build-out of video into areas that might not prove lucrative for the company. Does the private sector decide who gets services, or is it local government's responsibility?

The FCC has asserted authority without answering the question of social obligation. States were working on the issue, a number of them passing legislation to shift from local to statewide franchises, and negotiations already were settling the problem before the FCC intervened in what is basically a local government issue.

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