Verizon Talks Terms With Locals

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Verizon Communications Inc. is complaining to federal officials that cable franchising is a barrier to entry — and, at the same time, it’s quietly negotiating pacts with selected localities across the country.

For instance, Verizon brought a draft document to Tampa, Fla., earlier this year, and negotiations are ongoing.

“They know they need a franchise,” said Tampa cable-television manager Mindy Snyder, who stressed that she couldn’t discuss the talks.

But a draft document that’s part of the public record in Beaumont, Calif., shows Verizon is proposing a franchise pact that’s very similar to the town’s agreement with the incumbent cable company, with one major exception: The franchise area does not cover the entire town.

FOLLOWS PHONE LINES

Verizon has been consistent in stressing it should not be compelled to extend fiber-to-the-home construction beyond the boundaries of its current telephone operations.

In Beaumont, that means the incoming competitor will only go head-to-head with incumbent cable operators Adelphia Communications Corp. or Time Warner Cable in areas where it also delivers phone service, about two-thirds of the city.

The Beaumont document shows Verizon expects to deliver video throughout its city franchise within one year of approval.

It will offer analog and digital cable service, HDTV, digital video recorders and pay-per-view over its 860-Megahertz plant.

The proposed channel lineup would be a robust selection, including 36 broadcast stations and public, educational and government slots.

Nine channels are marked for PEG use, although elsewhere in the document Verizon pledges to light up just two channels: one for education and one for government.

The draft agreement stipulates that Verizon can program any unused PEG channels.

The lineup lists 117 current and anticipated basic cable channels (i.e. the gay-targeted Logo), 46 digital music channels, suites of digital international and general-interest channels, all of the premium multiplexes, 25 pay-per-view slots, 26 broadcast-TV stations and satellite HD channels and 52 on-demand channels, including Rainbow Media Holdings’ Mag Rack VOD suite and a Verizon-branded movies-on-demand channel.

But the channel lineup will not be finalized until launch, the report notes.

PEG INTERCONNECT

According to the proposal, Verizon will interconnect its PEG channels with Adelphia, the area’s largest operator. The cost of the interconnect technology would be shared by the operators, it said.

The PEG requirement is the flashpoint issue for lawsuits challenging the parity of overbuilder agreements. Incumbents often argue that companies which are later to market should be required to build studios and provide equipment at a level equal to the incumbent operator.

The draft proposal states that Beaumont will have no authority to regulate any of Verizon’s rates, because as an overbuilder it will be subjected to effective competition from the day it launches service.

Beaumont has held a public hearing on the draft. Its city manager did not return calls to discuss the status of negotiations.

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