Verizon Pursues Local Cable Franchises
Tuesday, July 19, 2005
Verizon Communications Inc. is making an aggressive push to break into the cable television market in the Washington region as part of a broader effort to expand its telephone network and offer an array of services nationwide.
The New York-based telecommunications giant has applied for cable franchises in three Washington area jurisdictions -- Howard County, the city of Bowie and the town of Herndon -- within the past six months. Verizon says more applications are on the way as it builds fiber-optic networks that allow it to offer ultra high-speed Internet access, hundreds of digital television channels and thousands of video-on-demand titles at competitive prices.
Verizon's television initiative, underway in 15 states, has put it at loggerheads with the cable industry, which says Verizon is seeking unfair competitive advantages in the deals it is trying to strike. But while Verizon is entering cable's core business, cable companies have begun to offer Internet-based phone services.
Yesterday, each side pressed its case on the cable issue before the Howard County Council, where some members voiced approval of providing consumers with an alternative to Comcast Corp., the county's sole cable service provider, with 70,000 customers. A similar proposal is scheduled to be presented tonight in Herndon, where the Town Council is also considering a Verizon cable franchise.
"We think competition is good," Howard County Council Chairman Guy Guzzone (D-Southeast County)said before the hearing. "We're pleased that two well-known, well-funded companies are interested in providing cable service in our county."
The council expects to vote on the application soon. If approved, Verizon has an additional 90 days to nail down details and win a cable franchise.
So far, some localities in Texas, Florida and California have granted cable franchises to Verizon. But none have been approved so far in Maryland or Virginia. Howard County would be among the first communities in Maryland to "open the doors to the robust competition that's coming" in the television and video marketplace if Verizon gets its way, said Harry J. Mitchell, a Verizon spokesman.
In 2004, Verizon invested $1 billion in its nationwide television initiative, and it has accelerated construction this year. In Maryland, the company has hired 250 full-time employees and more than 1,400 contractors to lay down fiber lines.
Brian A. Lynch, a Comcast executive for the Baltimore area, said his company has no problem with Verizon entering the cable business in Howard County. But the county should grant Verizon the same terms and conditions Comcast has, he said.
Lynch added that Verizon in many cases has tried to usurp the local franchise process and gain a competitive advantage. Verizon has been lobbying various states and Congress to sell cable-like television service without getting approval from the localities first, he said.
Many cable companies also say Verizon has disrupted cable service to thousands of customers in as it lays its fiber-optic lines. Lynch said that Verizon's contractors have cut Comcast's cable lines in Howard County more than 260 times in a 25-day period, causing service outages to more than 2,200 Comcast customers in the county.
Complaints about disrupted Comcast service have been launched in several localities around the country -- including Montgomery County -- since Verizon began expanding its network.
But in Howard County, complaints against Comcast have dropped 50 percent in the first half of the year compared with the same time last year, said Dean Smits, the county's cable administrator.
Smits said he too welcomes Verizon's arrival in the county considering that cable rates increase less in communities where cable operators face competition.
"When we do receive complaints [about cable service], one of the things consumers complain about most is lack of choice," Smits said. "Residents in Howard County are not unlike residents of the nation in general. They have been waiting since 1996 for the telephone companies to get in the cable business."
Congress passed landmark legislation in 1996 that allowed telephone companies to provide cable service in the same areas where they offer telephone service.
Staff writers Elissa Silverman and Yuki Noguchi contributed to this report.