Verizon, AT&T face local video franchising opposition

Representatives of local governments and cable operators stood shoulder to shoulder Wednesday to oppose efforts by Verizon and AT&T to convince Congress to lift the current local franchising requirements for video services.

Verizon Chairman and CEO Ivan Seidenberg and AT&T Chairman and CEO Edward Whitacre both stressed the benefits to consumers of new competition in the video service arena. If telcos are forced to get local franchises, their entry into video service is delayed, and cable companies can continue to raise prices, they said.

"Today, wireless, broadband Internet access and traditional telephony services are all highly competitive--as reflected in declining prices and an array of choices for consumers," Whitacre said, according to a copy of his statement. "Unfortunately, the same cannot be said for cable service. Between 1995 and 2004 the price for traditional cable service increased by 86%. Cable price increases continued in 2005. While a number of the price increases were in the 6% to 8% range (still more than double the rate of inflation), some of the increases were truly striking, such as Charter's 25% increase in Fort Worth, Texas; Time Warner Cable's 14% increase in Houston; and Comcast's 16% increase in Spokane, Wash."

In Keller, Texas, where Verizon has gone into competition with cable using its FiOS fiber-to-the-premises platform, cable firms have cut their rates by up to 42%, Seidenberg said.

Cablevision Chief Operating Officer Thomas Rutledge countered by saying the local franchise obligations assure complete coverage of a given area. By contrast, he said, "Verizon's fiber upgrade is focused on wealthier, suburban areas but leaves rural and urban centers virtually untouched." In addition, Cablevision provides free service to schools as part of its local franchise agreements, he said.

Rutledge said the Bell companies could take advantage of existing provisions for new video entrants, such as a New York regulation that allows any new video service provider that agrees to the terms of an existing franchise to get an approval hearing within 30 days. "Yet, no new telco entrant has sought to exploit this quick entry mechanism," he said.

Rutledge also claimed any current delays are not the fault of the local franchising process.

"In our service area of more than 400 communities, Verizon has only three local franchise applications pending," he said. "If this is any indication of the national experience, it appears that it is the business decisions of the telephone companies, not the local franchising process itself, that are causing delay."

Speaking on behalf of a coalition of local government organizations, Lori Panzino-Tillery of the National Association of Telecommunications Officers and Advisors, said telcos are trying to "tilt the playing field in their favor."

"Local government remains concerned that rhetoric and not facts have led members of Congress to believe that competition and innovation will flourish only if local government is removed from the equation," she said. "We are here today to help you understand that nothing could be farther from the truth."

Economics, not regulation, has kept the phone companies out of the video business, Panzino-Tillery said.

"The provision of video services has not yet proven to be as financially attractive as the telephone companies apparently require in order to provide the services they claim are the new lynchpin to their success," she said.

Local governments need to continue managing franchise rights in order to protect rights-of-way such as streets and sidewalks and collect fair usage fees for public property, Panzino-Tillery said. In addition, local governments are concerned about the continuation of public, educational and government (PEG) channels mandated by today's local franchise agreements, and about redlining, or denying new services to low-income or geographically hard-to-reach neighborhoods.

She also stated that local governments need to have enforcement powers to make sure service providers are living up to their agreements, and said that municipal governments are eager to work with the telcos and establish reasonable relationships, and won't require blanket coverage from the outset.

"By managing the deployment as we do, we protect the new provider's investment in infrastructure," Panzino-Tillery said. "We protect the public from unnecessary disruption of the rights-of-way, including safe use and enjoyment of the public rights-of-way. And, we ensure that new entrants are provided with unfettered access in a reasonable and timely fashion, while ensuring that they comply with all safety requirements. This system has worked well for cable, traditional phone and other providers for many years, and is necessarily performed by the local government."