After Ind., Franchise Battle Shifts to N.J.

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Even as Indiana’s governor signed a statewide video-franchising effort into law, a fractious fight continues over regulatory reform in New Jersey and the overall public-relations and legal struggle between the cable and telephone industries continued to escalate.

In New Jersey, a Senate committee on March 13 approved a draft of a reform bill that would enable statewide video certification within 45 days. S192 would only require a competitor (such as the bill’s backer, Verizon Communications Inc.) to commit to providing service to 60 of the state’s most populous cities beginning within three years of certification. Service must be widely available in those cities within six years, according to the measure’s current language.

Certification by the state Board of Public Utilities’ newly created cable office would allow operation for 15 years.

Cable incumbents, meanwhile, would be bound to their current deals — but could opt for early renewal under the terms of existing contracts.

Cable companies immediately branded the legislation a “sweetheart deal” for Verizon.

Cablevision Systems Corp., which, with Comcast Corp., serves most of the state, said in a statement, “This is a rush to hand Verizon a special deal that significantly raises taxes and would create an uneven playing field by letting Verizon pick and choose which areas will get its new services and which ones will not.”

There may be an uphill battle to approve the bill this month. The chambers are scheduled to go on “budget break” March 21. Through April legislators will focus only on state budget matters. If the bill is not subjected to both a senate and house vote by today (March 20), it may be mid-May or later before the legislators return to the topic.

The bill will also face opposition from mayors in the south of the state, for the majority of cities covered in the build-out are in North Jersey.

DISPUTE OVER ADS

While the lawmakers debate, the industries are fighting it out in the press. Verizon accused the state’s operators of stifling free speech when Time Warner, Comcast Corp. and Cablevision refused to sell ad time to the telco to promote its agenda.

Verizon’s 30-second spot states that rates have increased four times as much as the Consumer Price Index since 2001.

“The cable industry has been running virtually endless commercials in New Jersey attacking Verizon, yet they refuse to allow us to buy time on their channels to give another side of the story. It’s outrageous,” Verizon New Jersey president Dennis Bone said in a statement.

“A $90 billion phone monopoly complaining about high rates and not being able to get its message out is laughable. Is there anyone in New Jersey who hasn’t seen hundreds of Verizon ads?” Cablevision spokesman Jim Maiella asked.

Comcast put out a statement explaining its policy to reject ads containing unsubstantiated, false and misleading claims.

This policy is consistent with long-standing and generally accepted industry practices, spokeswoman Jennifer Khoury said. Comcast has accepted other Verizon ads around the country, she said, including spots for Verizon’s competitive cable service, FiOS TV.

Verizon might run the spot on broadcast stations in New York and Philadelphia (the home bases of Cablevision and Comcast, respectively), officials said.

In Indiana, the legislative battle is done. Gov. Mitch Daniels last week signed a franchising-reform bill that enables new competitors to get statewide operating authority within 30 days of application.

Daniels has devoted himself to reversing Indiana’s financial fortunes. In past speeches, he called telecommunications reform a key to economic improvement.

The bill takes franchising out of the hands of city officials and places it under the authority of the Utility Regulatory Commission.

The bill differs from those in other states in that it will allow incumbent operators to decide, after July 1, whether to opt out of local agreements and seek state licensing.

Franchising reform bills are cropping up more and more.

On March 23, Florida legislators will hold a workshop on a bill similar to the deregulation measure approved last year in Texas. The Secretary of State’s office would approve competitive applications. Oversight of rates or customer-service issues would be turfed to the Department of Agriculture and Consumer Affairs.

LOUISIANA LOOK-SEE

Louisiana operators, still reeling from Hurricane Katrina, anticipate getting a first look at a BellSouth Corp.-backed reform bill there by today (March 20).

Even small cooperative and independently owned telcos are pushing reform in Minnesota.

And Qwest Communications International Inc. is promoting a bill in Iowa that Tom Graves, executive director of the Iowa Cable Telecommunications Association, branded “almost mean-spirited.”

The Iowa cable group countered that expedited local franchising was the best means of reform.

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