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Cities Slap Telcos Over Franchise Procedures

To hear some municipal officials tell it, AT&T and heavyweight cousin Verizon Communications are employing hardball tactics in their quests for video franchises.

"We believe AT&T was trying to create an appearance of negotiation breakdown, to establish a record in support of statewide [and national] franchise law," says Peter Burchard, city manager of Naperville, Ill., where AT&T recently scrapped plans to deploy "Project Lightspeed" on claims the city council inserted a poison pill (i.e., buildouts) in its franchise proposal (Telecom Policy Report, Aug. 18). Adds sister publication CableFAX Daily, the telco already is knee-deep in a dispute with seven nearby municipalities over their collective moratoria on the issuance of construction permits for its video service. AT&T spokesman Rob Biederman refused to comment on the litigious debate, and repeated calls to additional execs went unanswered.

Late last week, the seven munis filed a response with the Federal Communications Commission (FCC) regarding AT&T's May 24 letter calling for Commission intervention and offering statements that underscore a common theme: "If AT&T is truly interested in rapid deployment and providing wireline competition, its tactic of suing the Illinois municipalities...does not reflect such a desire."

Many who are privy to the talks claim AT&T staunchly requires that it not be governed like a cable operator and, therefore, will not be subject to build-out requirements. When these demands aren't met, sources say, the gloves come off. "We want competition, but when somebody comes in and says 'my way or the highway,' well, it's been mostly the highway," says Bruce Anderson, a committee member for a Chicago-area municipal caucus attempting to draft a template to be used for franchise negotiations by some 230 members.

Verizon, meanwhile, is involved in a highly publicized lawsuit with Montgomery County, Md., over county franchise law. A federal judge denied Verizon's Aug. 8 request for an injunction to invalidate the law and to force county officials to negotiate a franchise deal in 60 days.

Says Libby Beaty, executive director of the National Association of Telecommunications Officers and Advisors, such legal action by Verizon is rare, but the telco makes negotiations difficult by budging little on its standard form agreement and by using its imposing heft to curry favor. "It's tough when a huge corporation comes in with [a standard] agreement that doesn't comport with community ways of doing business," Beaty adds. Earlier this month, Verizon mirrored AT&T when it ceased talks with six New Hampshire towns, only to subsequently announce it had suspended plans for a statewide video rollout. "This is merely a pause in discussions," says Verizon spokeswoman Jill Wurm. "It's a matter of limited resources [equipment and negotiators] that had to be allocated elsewhere."