A Cable Victory For Verizon — Friday, May 12, 2006


Verizon's plan to sell cable TV over a new fiber network in New Jersey cleared a major hurdle Thursday.

The Assembly Telecommunications and Utilities Committee approved a bill that would grant Verizon a statewide video franchise, allowing it to bypass the lengthy town-by-town negotiating process that has been in place for more than 30 years.

A slightly different version of the bill was approved by a state Senate committee in March.

After the hearing, Dennis Bone, president of Verizon New Jersey, said he was "extremely happy" the bill passed the committee.

Verizon has been rolling out its New Jersey fiber network, which also offers phone and Internet service, for more than a year. And it's been lobbying for rule changes that would speed up the company's entry into the cable TV market here.

The move has been fiercely opposed by the cable TV industry, which stands to lose market share if Verizon competes for TV customers.

Verizon is spending billions on its new FiOS service, installing the network across the country. It has begun selling TV service in a handful of towns.

A consumers group testifying at the Assembly hearing Thursday pointed to some problems with the bill.

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, criticized language that would let Verizon decline to wire some locations if it was not "commercially feasible." She said state regulators should be brought in to decide if Verizon is allowed to opt out of an area.

Following the meeting, Verizon spokesman Richard Young disagreed.

"That's not the way we interpret the bill. We are committed to building this network as quickly as possible and to as many places as possible, and the fact is we're not looking at ways to get out of these requirements," he said.

Noticeably absent from the debate Thursday was the state's cable industry.

Mark Nevins, spokesman for the New Jersey Cable Telecommunications Association, which represents the state's cable companies, later said the group made a strategic decision not to testify because members were not clear what changes the Assembly version of the bill might contain.

He said the group continues to oppose changing the way the video franchises are currently awarded. The cable industry would also be allowed to obtain a statewide video franchise under the proposed bill, which applies to any company seeking to sell cable TV.

Two committee members, Vincent Prieto, D-Secaucus, and Joseph Pennacchio, R-Morris Plains, abstained. Pennacchio cited issues with franchise fees, which would rise under the proposal.

Under the bill, franchise fees paid by consumers and passed along to towns to pay for property tax relief would rise and help subsidize a senior citizen prescription drug program. From the current level of 2 percent of the basic cable rate, the fees would rise to 4 percent of an expanded cable package, which averages about $67. Fees would increase for all cable customers, but only in towns where Verizon has begun to market its television service to at least 60 percent of homes in a town.

The Communications Workers of America, which represents about 3,500 Verizon workers in New Jersey, also objected to the bill.

It "falls far short of the goals of wiring all of New Jersey," CWA economist Ken Peres testified.

He also accused Verizon of "attacking workers' rights" and closing down call centers at Bedminster-based Verizon Wireless, a joint venture co-owned with British-based Vodafone. The union has been running radio ads attacking the legislative plan.

"The CWA may have its concerns but frankly we're more focused on the more than a dozen unions and labor organizations that have expressed overwhelming support for this legislation," said Young.

So far, Verizon has applied for individual franchises in 92 towns. It has announced its FiOS service in 147 towns and has begun selling high-speed Internet service over the network in 100.

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