Indiana’s General Assembly has become the second in the nation to approve a statewide video franchising process. A bill giving exclusive franchise authority to the Indiana Utility Regulatory Commission now awaits Gov. Mitch Daniel’s signature.

The measure allows telephone companies to apply for a statewide video franchise. They must still pay local franchise fees, equivalent to what cable companies pay, but will face no build-out requirements, which were included in Virginia’s recent video franchise legislation.

Indiana is the second state, after Texas, to create true statewide franchise authority.

Supporters of the measure say it will spur economic development by attracting telephone company investment in Indiana. Fort Wayne, Ind., is already a site of Verizon’s FiOS deployment. AT&T is the largest incumbent telco in the state.

Cable companies can also apply for a statewide franchise, but must honor the terms of existing local franchise agreements through 2009 as they apply to construction requirements and support of public access channels.

The measure also removes price controls on local telecom services but sets limits on how often prices can be raised on flat rate service to no more than $1 per month, within a 12 month period. In addition, the bill states that within 18 months of a price increase, the service provider must offer broadband service to 50% of the population being served.

In addition, it preserves Indiana’s existing commitment to flat rate telephone service, prohibiting service providers from offering local measured service. That continues a tradition that goes back more than a decade, when Indiana was the only state of the five former Ameritech region states to prevent that company from moving to local measured service.

The IRUC assumes its position as sole regulatory franchising authority for video services on June 30.