| MetroWest Daily News 03/26/2006 |
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MetroWest officials say the municipal licenses that companies need to sell cable television to residents are instrumental in securing local cable programming and services.
But New York-based Verizon Communications Inc., which is rolling out a TV service, called FiOS, to compete with Comcast Corp. and RCN Corp., says the licensing process is "onerous" and needs reform.
In Massachusetts, companies that want to sell cable TV services have to go town by town and city by city to negotiate so-called franchise licenses with local officials. In the past, Comcast and RCN have agreed to offer senior citizen discounts on cable TV, set up networks for the public buildings in town and pay for public access channels and TV studios accessible to the public.
Verizon is currently negotiating video licenses with about 40 Massachusetts towns, and is already selling FiOS TV, as well as Internet and voice services, in Woburn and Reading. The company is also currently selling Internet and voice services, which do not require licenses, over its FiOS network in several MetroWest towns.
At the same time, the company is lobbying Congress to instate a national franchise licensing process. Congress is deliberating over two bills but details are not yet public.
Bruce Leichtman, a media analyst for Leichtman Research Group in Durham, N.H., said a national franchise essentially allows a company to provide TV service wherever it would like.
"A local franchise demands the whole town have access to cable services, while nation or statewide allows them to service wherever they'd like to, even within communities," Leichtman said. "We should not assume that wider-scale franchising will speed up rollout."
Verizon has secured statewide franchise licenses in Texas and Virginia and is actively discussing a similar deal in New Jersey and Florida, while eyeing other states, according to Verizon spokesman Cliff Lee.
In Massachusetts, the company filed a petition with the state Department of Telecommunications and Energy (DTE) requesting a 90-day deadline for towns to accept or deny new franchise agreements. The DTE has yet to respond.
Lee said that some Verizon franchise license reviews across the nation have taken 18 months to two years, which is preventing the company from providing cable TV and competition that could cut prices for subscribers.
In the meantime, RCN and Comcast, the "incumbent" cable companies, have responded by calling Verizon's attempts to change the rules mid-game unfair.
Marc Goodman, a spokesman for Philadelphia-based Comcast, said, "We want a level playing field."
In a letter to the DTE, Richard Ramlall, RCN's senior vice president of strategic and regulatory affairs, said "there is little evidence that Verizon has committed the necessary resources to obtain the local franchise agreements it needs, or that it has been unreasonably refused where it sought franchises.... Instead, Verizon has focused substantial resources on lobbying the FCC (Federal Communications Commission), Congress and state legislatures and regulators for relief from local franchising requirements."
RCN also pointed out three-year "opt-out clauses" in Verizon contracts with some Massachusetts towns that would allow the company to get out of the franchise agreement before the 10- to 15-year licenses expire.
Lee, the Verizon spokesman, said Verizon inserted these opt-out clauses "for protection... in the event that the service doesn't sell or there isn't a demand for it." He also emphasized that Verizon is spending billions to install its FiOS fiber-optic network and is "committed to the long term."
"The tactic of cable television companies right now is to slow down and block FiOS TV and Internet," said Lee. "They will do everything they can to achieve that. The longer they can slow us down from getting franchises in local municipalities, the longer they can protect their monopolies in those local municipalities."
The cable companies see Verizon as talking out of both sides of its mouth.
RCN's Ramlall writes in the letter to the DTE that while Verizon tells regulators how difficult it is to achieve local franchises, Verizon's chief executive, Ivan Seidenberg, told investors that Verizon was making good progress achieving franchise licenses.
Lee said the company sees franchising as "a three-front effort -- local, state and federal -- in terms of trying to streamline franchising."
Barry Sims, chairman of Holliston's Cable Advisory Committee, sent a letter to other committee members informing them of Verizon's attempts to ease franchising rules. Sims writes that national franchising would strip local communities of their funding for the services they've provided to residents for years. The funding "would surely go to the feds instead."
Last week, Sims said Comcast gave the town $160,000 in its last license to set up an "I-Net" system connecting all the town's public facilities with an internal cable network. Verizon, as part of its agreement with the town, should pay an "equivalent" amount for an equivalent service, he said.
Holliston is currently negotiating a contract with Verizon, and sent a proposal to the company with 12 key services the town wants in return for access to town residents.
"In the case of Holliston, we've been waiting since December for Verizon to react to our proposals," said Sims. "This is not about the town dragging its feet, this is about Verizon trying to make a point to the feds."
Natick is also in the midst of franchise negotiations with Verizon and is facing a similar situation, according to Hank Szretter, chairman of the Cable Advisory Board there.
"Any company that applies for a license, we expect them to have the same commitment to public access as our other license holders," said Szretter. "Verizon wants to operate under a different set of rules, but have the same benefits. It's not a fair thing. Why should they get a better deal than the other providers?"
Szretter said about 5 percent of Comcast and RCN's revenue from Natick goes back into services the town provides, such as its public cable access program.
"Without it, it wouldn't exist," Szretter said about the Pegasus system, which allows residents who are members of the nonprofit organization to make films or record public events and show it on TV.
Newton is also negotiating with Verizon.
"We require our current providers to support our cable access network and give seniors a discount," said Jeremy Solomon, a spokesman for the city. "There is some question whether a national or statewide franchising policy would enable us to include these elements that are important to us within a contract."
Lee would not respond to questions related to comments from town officials, saying the towns' concerns would be dealt with in the public hearings for franchise licenses.
(Andrew J. Manuse can be reached at amanuse@cnc.com or 508-626-3964.)
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