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from: MetroWest Daily

Verizon bill stirs debate over competition, control in cable market

By Priscilla Yeon & Gintautus Dumcius/State House News Service
State House News Service
Tue Jun 05, 2007, 05:30 PM EDT

A chief sponsor of a bill that would streamline cable franchising approval from a year to 15 days asked members of the Committee on Telecommunications, Utilities and Energy to deploy a task force to examine his proposal and find the best way to reform cable franchising laws in the state.

Sen. Steven Panagiotakos (D-Lowell) said the reason he filed the bill, which he said was partly authored by Verizon, is to start a discussion in the Legislature about reforming cable franchising. Rep. James Vallee (D-Franklin) has filed a similar bill.

"We really need to re-look, re-evaluate our regulatory system," said Panagiotakos. "I think we can all agree cable competition is good for consumers and it's good for Massachusetts."

At an emotionally-charged and crowded hearing, hundreds of supporters and opponents of the bill applauded and booed testifiers, with opponents wearing "Keep Cable Local", or "Don't mess with Access," and supporters wearing buttons saying: "Vote Yes for Competition and Cable TV Choice."

According to Verizon, the bill would eliminate negotiation at the local level between municipal officials and cable providers and direct state telecommunications officials to approve applications within 15 days. It would standardize the application process and give municipalities the authority to set franchise fees paid by consumers based on the providers' gross revenues. It would also support local access to public channels and allows cities and towns to ask for up to 1 percent of the cable providers' gross revenues to pay for Public Educational & Government (PEG) costs.

"I'm in strong support of local access channel and local access programs, that's why I was in support of this bill," said Panagiotakos. "It didn't give up local control, it enhanced local control." He said his bill allows municipalities to set the rates and not go through the trouble of negotiating with cable providers.

But dozens of local officials associated with the Massachusetts Municipal Association (MMA) urged lawmakers to kill the proposal, claiming it diminishes local authorities' ability to negotiate what is in their residents' best interest.

"This isn't about protecting consumers and having a fair competition to all," said Geoffrey Beckwith, MMA executive director. He also mentioned recent reports that quoted Verizon officials claiming their success in expanding cable franchising in Massachusetts.

Somerville Mayor Joseph Curtatone, who chairs the MMA's task force on cable franchising, said Verizon's proposal is a "self-serving bill" that promises to benefit consumers due to competition under false pretense.

Verizon has expanded its cable TV services in 49 communities in the state and has applications pending in 19 other communities.

According to Donna Cupelo, Verizon's president for Massachusetts and Rhode Island, it took an average of 15 months for communities to approve Verizon's video licenses.

"That's way too long," said Cupelo. She said often times, selectmen, who negotiate with cable providers, step down from their positions and Verizon is left with a pending application for several months.

"We have negotiated in good faith. But we can't be everywhere doing this all at once individually," said Cupelo.

Town officials who have negotiated with Verizon, Comcast and RCN, said their negotiation process varied from four to six months.

Curtatone said the bill promotes discrimination because it strikes out a build-out requirement that ensures all parts of a community have equal access to cable services. Other town officials claimed that the bill would allow Verizon to "cherry pick" only the wealthy parts of communities for cable service.

After his testimony, Panagiotakos told reporters his original proposal did not include the build-out requirement but a version that was filed with the committee gives state regulators the authority to stipulate a timeline with cable companies to build out the network throughout the entire community.

"There is a concern about changing," said Panagiotakos. "But the status quo is really unacceptable."

According to MassPIRG's Eric Bourassa, Verizon's claim that competition will decrease prices is not necessarily true, especially in poorer and more urban or rural communities where Verizon may choose not to offer service.

Municipal officials are also concerned by the 1 percent PEG fee, with officials claiming it would not be high enough to maintain costs associated with equipment for local access studios. Other officials said the lack of local negotiations would endanger their roads when providers build their cable network.

Panagiotakos told the committee he is open to revisiting the fee. According to Verizon, the proposal doesn't change municipal control of public rights-of-way.

"There have been a lot of misinformation," said Joe Zukowski, Verizon vice president of government affairs. Zukowski said the bill is similar to laws adopted in 13 states. "All we're asking is for a fair share. We want to compete in this business."

"I will say quite honestly, there has been an exaggeration from both sides," said committee co-chair Rep. Brian Dempsey (D-Haverhill).

Someplace between what local officials are saying and Verizon and Comcast are arguing "lies the truth," said Sen. Michael Morrissey (D-Quincy), the other committee co-chair.

The Legislature's options are varied, he told the News Service, including putting "more teeth" into the existing law or mandating arbitration.

"We've got to talk to a lot more people," he said after five hours of testimony, before returning to his chair. "There's a whole bunch of alternatives, from doing nothing to changing the process."

Dempsey said both sides made a "compelling case," though there appears to be competition at this point.

The committee will be looking carefully at the issue of how long it takes to negotiate contracts, with testimony offering numbers ranging from four months to a year, he said.

Dempsey said there is no timeline attached to the bill. "This is the first year, the first session," he said. "We want to give it appropriate attention and due diligence."

Last year, Verizon filed a request with the state Department of Telecommunications and Energy to expedite the municipal approval process from a year to 90 days for cable TV service. The regulatory proposal proved unsuccessful after it went through public hearings and faced strong opposition from the MMA.

This year, the company approached legislators to file a proposal streamlining the franchising process to 15 days.

The proposal triggered different groups to take action in favor or against the bill. Keep it Local MA has a web site that encourages customers and local officials to "stop Verizon from stepping on the rights of your town." Besides providing information in Portuguese, Spanish, Vietnamese and English, users can enter their name and town to automatically issue a letter to legislators to express opposition to the Verizon proposal.

Another group, Consumer for Technology and Cable Choice, was formed early this year. The group recently launched radio ads in support of the legislation while the New England Cable and Telecommunications Association, is sponsoring ads against the proposal.

"One of the fundamental concepts of our economy is that consumers should have choices," Jack T. Yunits Jr., president of Massachusetts Consumers for Technology and Cable Choice (MCTCC) and the former mayor of Brockton, said in a statement. "There is no legitimate reason why you can shop at five or six different grocery stores, go to a dozen gas stations, but only be able to buy television service from one company. The only reason this situation exists is because the government forces it to happen."