NEWS
Federal Communications Commission
445 12th Street, S.W.
Washington, D. C.  20554
This is an unofficial announcement of Commission action.  Release of the full text of a Commission order constitutes official action.
See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
News Media Information 202 / 418-0500
Internet: http://www.fcc.gov
TTY: 1-888-835-5322
FOR IMMEDIATE RELEASE News Media Contact:
December 20, 2006 Rebecca Fisher (202) 418-2359
FCC Adopts Rules to Ensure Reasonable Franchising 
Process for New Video Market Entrants
Washington, DC – The Federal Communications Commission (FCC) today adopted a 
Report and Order and Further Notice of Proposed Rulemaking that establishes rules and 
provides guidance to implement Section 621(a)(1) of the Communications Act of 1934, which 
prohibits franchising authorities from unreasonably refusing to award competitive franchises for 
the provision of cable services.
In the Order, the Commission concludes that the current operation of the franchising 
process constitutes an unreasonable barrier to entry that impedes the achievement of the 
interrelated federal goals of enhanced cable competition and accelerated broadband deployment.  
The Order addresses several ways by which local franchising authorities are 
unreasonably refusing to award competitive franchises.  These include drawn-out local 
negotiations with no time limits; unreasonable build-out requirements; unreasonable requests for 
“in-kind” payments that attempt to subvert the five percent cap on franchise fees; and 
unreasonable demands with respect to public, educational and government access (or “PEG”).
To eliminate the unreasonable barriers to entry into the cable market, and to encourage 
investment in broadband facilities, the Commission:  
§ Found that franchising negotiations that extend beyond certain time frames amount to an 
unreasonable refusal to award a competitive franchise within the meaning of Section 
621(a)(1); 
§ Found that requiring an applicant to agree to unreasonable build-out requirements 
constitutes an unreasonable refusal to award a competitive franchise;
§ Found that, unless certain specified costs, fees, and other compensation required by local 
franchising authorities are counted toward the statutory five percent cap on franchise 
fees, demanding them could result in an unreasonable refusal to award a competitive 
franchise; 
§ Found that it would be an unreasonable refusal to award a competitive franchise if the 
local franchising authority denied an application based on a new entrant’s refusal to 
undertake certain unreasonable obligations relating to public, educational, and 
governmental (“PEG”) and institutional networks (“I-Nets”); and
§ Preempted local laws, regulations, and requirements, including local level-playing-field 
provisions, to the extent they impose greater restrictions on market entry than the rules 
adopted herein.  
§ The Commission concluded that although the record allows it to determine generally 
what constitutes an “unreasonable refusal to award an additional competitive franchise” 
at the local level, the Commission does not have sufficient information to make such 
determinations with respect to franchising decisions made at the state level or in 
compliance with state statutory directives, such as statewide franchising decisions.  As a 
result, the Order addresses only decisions made by county- or municipal-level 
franchising authorities.
The Commission also adopted a Further Notice of Proposed Rulemaking in which it 
seeks comment on how its findings in the Order should affect existing franchisees, tentatively 
concludes that the findings should apply to existing franchisees at the time of their next franchise
renewal process, and seeks comment on the Commission’s statutory authority to take this action.  
The Commission will conclude this rulemaking and release an order no later than six months 
after the release of the Order.
The Commission adopted a Notice of Proposed Rulemaking on November 3, 2005 to seek 
public comment on these issues.  
Action by the Commission, December 20, 2006, by Report & Order and Further Notice of 
Proposed Rulemaking (FCC 06-180). Chairman Martin, Commissioners Tate and McDowell 
with Commissioner Copps and Adelstein dissenting.  Separate statements issued by Chairman 
Martin, Commissioners Copps, Adelstein, Tate, and McDowell.
--FCC--
Media Bureau Contacts: Brendan Murray (202) 418-2120
Mary Beth Murphy (202) 418-2120