By Cassimir Medford

After its embarrassing political debacle over the AT&T/BellSouth merger vote, the U.S. Federal Communications Commission on Wednesday gets a chance to end the year on a positive note as it tackles the issue of easing the entry of the phone companies into the pay-TV business.

The commission will debate and vote on whether to offer the phone companies a national franchise to offer TV services. Currently the phone companies are saddled with the outdated requirement of going to each of thousands of municipalities across the country to negotiate their entry into the business.

Despite the arguments made by the cable industry, along with its band of “independent” grassroots supporters, and local municipalities angered by this attempt to eliminate them from the process, the local video-franchising requirement should be trashed.

The House of Representatives passed a telecommunications bill that would have dismantled the local video-franchising system, and the Senate passed a similar bill in committee that would have also ended the local video-franchising requirement.

But both bills stalled or died because of the hot potato issue of network neutrality. But frankly the franchising rules were set decades ago when municipalities were called upon to protect their citizens from monopolistic excess. By entering the pay-TV market, the phone companies are theoretically increasing the level of competition.

Changing Times

“Times have changed for the phone companies with the advent of the cable companies, wireless communications, and VoIP, so it’s imperative that this be treated as a competitive alternative and be freed up to compete nationally,” said Joe Nordgaard, director of the wireless consulting firm Spectral Advantage.

So the FCC has a great opportunity to score a point for competition, its reason for being. It will no doubt approve a national franchise for the phone companies.

But lately the commission has not had a great track record approving anything. It has spent weeks reaching a consensus on whether or not conditions such as Net neutrality should be attached to the proposed AT&T/BellSouth merger.

At the heart of the problem was the recusal of Republican commissioner Robert McDowell from the vote. Mr. McDowell decided to sit out the vote because of his long history as a telecommunications lobbyist.

But that left the FCC with a 2-2 split between Republicans and Democrats. The result was a stalemate. The Republicans wanted an unconditional approval while the Democrats wanted stiff conditions applied to the merger.

Will He or Won’t He?

The Republican chairman of the commission, along with the FCC’s general counsel, did all they could to get Mr. McDowell to change his mind and vote on the merger (see FCC at Merger Crossroads).

FCC at Merger Crossroads

After a few days of contemplation, Mr. McDowell finally decided to publicly recuse himself from the vote.

Frankly the fact that Mr. McDowell drew out the drama for so long was pathetic. Based on what he said at his confirmation hearings, it was clear that he had to sit out this vote.

His past vested interests required him to step aside, yet he made a very easy decision into a very tough one. It was not the FCC’s finest moment, but hopefully national video franchising clears the air and gets the FCC back on track in 2007.