4. What Changes in Rules Are Needed to Eliminate Unfair and Asymmetric Bonding Requirements?

Current rules require that for each state video franchise granted, the holder must post a bond of no "less than $100,000 or more than $500,000."20 The ACR of March 27, 2008 notes that because of wording of the current requirement, a person or entity applying for several franchises could experience a cumulative bonding requirement that "may exceed $500,000."21 On the other hand, a person or entity with only one franchise would be subject to the "$500,000 limit, even though the one franchise area by itself might contain more households than all of the franchise areas to be served by the applicant for multiple franchises."22 The ACR posed that this "disparate treatment of state video franchise holders ... may have an anti-competitive impact, contrary to the intent of DIVCA."23

The ACR of March 27, 2008 proposed to amend GO 169 "to provide that a person or entity applying for more than one state video franchise, directly or through its affiliates, will not be required to execute bonds whose cumulative amount exceeds $500,000, regardless of the number of state video franchises sought or already held."24

AT&T,25 CCTA,26 DRA,27 and the Small LECs28 support the modification of the proposed changes in the bonding requirement. No party expressed opposition to the proposed changes in either opening or reply comments.

Based on the considerations detailed above and the considerations that led to the setting of the original $500,000 standard in Decision (D.) 07-03-014, we find that the revised rule contained in Appendix B, which limits the cumulative bonding requirement to any one holder of multiple video franchises to $500,000, is sufficient to provide adequate assurance of the financial qualifications of the franchise holder. Moreover, the revised rule avoids the potential disparate treatment of video franchise holders who elect to serve California through several different video franchises rather than through one single franchise. As such, the revised rule is more consistent with the statutory intent of DIVCA to encourage video competition. We therefore find that the revised rule is reasonable, in the public interest, and consistent with DIVCA.

20 GO 169 Section IV.A.1.a.

21 ACR of March 27, 2008 at 6.

22 Id.

23 Id.

24 Id.

25 AT&T Opening Comments at 1.

26 CCTA Opening Comments at 1.

27 DRA Opening Comments at 1.

28 Small LECs at 2.

Previous PageTop Of PageNext PageGo To First Page