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Verizon to Seek Towns' OK to Offer TV Via Fiber Network

Posted on: Tuesday, 28 June 2005, 15:00 CDT

Verizon will be asking some Bergen County towns soon for permission to sell TV service over the new fiber network it's building, while still hoping for a change in the law that would move the decision-making power to the state level.

The phone giant's efforts to enter New Jersey's TV market are likely to simmer here through the summer, but developments are also afoot in Washington, D.C., that could shape the outcome of any changes here.

State law requires Verizon to go town by town for permission to provide television through its fiber network, as cable TV companies do. Earlier this month plans by New Jersey lawmakers to introduce a statewide TV franchise bill stalled, and the proposal may not be introduced until after the November elections.

In an interview last week, Dennis Bone, president of Verizon New Jersey, said, "We're going to start forward on the road of negotiating individual franchises in a few weeks."

That means towns such as Closter and Wyckoff, among the first to get Verizon's FiOS (Fiber Optic Service) - which currently consists of phone and high-speed Internet - could begin the franchise negotiation process soon.

Verizon promises to deliver a package of TV services that will compete with cable-company offers. It says it will comply with current rules, but it's pushing for a change in the law that would enable it to bypass the individual town-by-town negotiations, which can be lengthy. Verizon says it will be ready to turn on TV service in 70 New Jersey towns by year-end, but obtaining franchises will delay the start of that service until mid-2006 at the earliest.

Verizon believes the cable industry, which has lobbied on the state level to stop Verizon's advance into its markets, is likely to put up opposition on the local level as well.

"Cable will say or do anything to distort the picture here," said Bone.

Karen Alexander, who heads the New Jersey Cable & Telecommunications Association, a group which represents the state's cable companies, said it's too early to say what might happen.

"I don't have a crystal ball as to what would happen on the local level," she said.

While the sparring continues here, plans are underway on a federal level to revamp the rules.

A spokesman for U.S. Sen. John Ensign, R-Nev., confirmed last week that the lawmaker plans to introduce a bill in late July that would revise the 1996 Telecom Act to allow companies to obtain a nationwide TV franchise.

"The senator supports getting government out of the way, letting market forces dictate what services customers receive," said Ensign's spokesman, Jack Finn.

Ensign told the trade magazine Communications Daily that there's "no sense" in having thousands of local governments making so- called entry decisions when the video market is competitive.

That's potentially good news for Verizon and other large regional phone companies such as Texas-based SBC Communications hoping to break into the television market.

So far, Verizon's efforts to get statewide franchises in other states including Texas, Virginia, and California either have stalled or have failed.

The company has obtained six franchises in towns across the country.

Some analysts believe that if the phone companies get lawmakers to include a nationwide TV franchise in the '96 Telecom Act revision, cable would be successful in getting them to include language that would lift regulations on basic cable service.

In a recent speech, Kyle McSlarrow, president of the National Cable & Telecommunications Association, called for "minimal economic regulation and a reliance on market forces wherever possible."

"Like services should be treated alike, and everyone should play by the same rules," he said.

In New Jersey, about 300,000 customers subscribe to basic cable, the only tier of service whose rates are regulated.

Washington observers believe there's a chance lawmakers may be delayed in addressing TV franchises while they grapple with other issues.

When federal lawmakers do turn their attention to the question of phone companies getting into the TV business, there will be fights aplenty.

Analysts at Legg Mason write that "efforts to establish a national video franchise ... will trigger complex battles among numerous parties."

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E-mail: mckay@northjersey.com

Source: Record, The; Bergen County, N.J.

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