Court Orders Mediation in Md.

8/11/2006 8:00 PM Eastern

Negotiations for a Verizon Communications Inc. video franchise for Montgomery County, Md., should move forward, now that a federal court judge has assigned a mediator to hash out a contract dispute between the parties.

Judge Marvin Garbis of the U.S. District Court for the District of Maryland said Aug. 8 that he was appointing a magistrate. At that time, the judge refused a request by the telephone company for a preliminary injunction against the county.

Verizon filed suit June 29 against county regulators, alleging their franchising process constitutes prior restraint. Local officials enjoy “untrammeled discretion” to award or deny franchises at will, according to filings in the case.

Verizon first approached the county in March 2005, seeking a franchise to deliver its FiOS TV product in competition with incumbents RCN Corp. and Comcast Corp. But according to the lawsuit, the request has been subject to private negotiations, public hearings, 30-day notice requirements and other procedures the telephone company has deemed a barrier to entry.

The most divisive issues include the “most favored nations” clause in the county’s franchise agreements with the incumbents, which demand the same operating terms of competitive late-comers as those applied to initial providers; and build-out requirements.

Verizon’s lawsuit sought intervention in the franchising process, so officials are pleased with the judge’s ruling.

“The judge’s decision to order a rapid negotiation, mediated by a magistrate judge, should break through the logjam and move the process forward. We’re eager to work with the court-appointed mediator to reach a lawful agreement with the county,” said Verizon Maryland spokesman Harry Mitchell.

“The judge has sided with the residents of Montgomery County and denied Verizon’s attempt to enter the market by striking down our consumer safeguards,” said county chief administrative officer Bruce Romer.

Hot Spots
The court-appointed magistrate will have to mediate several divisive issues in Verizon Communications Inc.’s negotiations for a Montgomery County, Md., franchise. Among these:
Buildout requirements: The county wants the system built in four years, reaching down to 15 homes per mile. Verizon wants five years from the date it decides to begin delivering service, and only down to a density of 30 homes per mile.
Internet fees: Verizon officials want to clarify that franchise fees may not be collected on the delivery of telephone or high-speed data services.
Customer service: The county has stringent customer-service regulations governing call-response times, consumer notifications and outage repair that are already applied to existing providers.

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