Baby Bell Hits a Snag in Jersey

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A franchise-reform bill backed by Verizon Communications Inc. is now unlikely to hit the floor of the New Jersey Legislature until after November's gubernatorial election.

Verizon spokesman Richard Young said company officials have been discussing a potential bill that would allow Verizon to enter the video-delivery business in the Garden State without seeking support from each city it serves.

Unlike most states, New Jersey municipalities choose a cable franchisee, then send the process to the state Board of Public Utilities, which actually grants the franchise.

A bill contemplated by Verizon would allow the telephone company to go straight to the BPU for a “territory-wide” franchise. (Verizon does not provide telephone service to the whole state).

To gain support from New Jersey cities and educators for its franchise-reform plans, Verizon is offering sweeteners to both. The telco is proposing to pay localities 3% of gross revenue as a franchise fee, as opposed to the 2% fee incumbents pay now, as The Wall Street Journal reported last week.

Young said the fee arrangement is not a strategy that could be replicated elsewhere. Municipalities in most states already charge the federally set maximum franchise fee of 5%, so state officials would not have the flexibility to negotiate a higher fee from Verizon, he said.

As for schools, Verizon pledges to provide free premise equipment and free video portals to all libraries and K-12 school districts.

Those sites will have to pay for the connection to the telephone plant, but at special “Access New Jersey” rates, according to Verizon. The sites can qualify for subsidies from the universal service fund to help defray the cost.

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