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from: Boston Globe

Verizon seems to flip-flop on local video approvals
Firm tells investors need to get local OK's not hurting TV rollout

By Carolyn Y. Johnson, Globe Staff | June 5, 2007

For months, Verizon Communications Inc. has been pushing legislation that would shift control of the cable franchising process from local to state officials, telling legislators that the current system is a major obstacle to competition.

But just days prior to today's Beacon Hill hearing on the bill, a top company official told investors that the existing licensing processes in Massachusetts, Pennsylvania, and New York had not impeded the expansion of the company's next-generation fiber-optic network.

"I think we will be able to do what we need to do in Pennsylvania. The same is true for Massachusetts," Doreen Toben , Verizon's chief financial officer and executive vice president, told investors at the Lehman Brothers Worldwide Wireless and Wireline Conference last Thursday. Nationwide, the company holds franchises for more than 10 million homes, and "we certainly have enough [franchises] to build this year and next year. So we don't think franchising is holding us up at all at this point."

In contrast, Verizon has spent the past few months telling lawmakers that Massachusetts' current franchising system -- in which Verizon must go community by community to seek approval to offer video service -- is a major obstacle.

"They'll tell you it's been very slow," Democratic state Senator Steven C. Panagiotakos of Lowell said yesterday. Panagiotakos co sponsored the Cable Choice and Competition Act, which would allow the company to seek state, rather than local approval for cable franchises. "Unfortunately, it hinders their investment into Massachusetts when they make infrastructure investments," he said.

The contrast between Verizon's messages to Wall Street and state officials casts light on a contentious debate that has pitted municipal advocates and cable companies together against Verizon over the past few months.

"Just last Thursday night, Verizon got their 49th franchise," said Paul Cianelli , president of the New England Cable and Telecommunications Association, which represents the cable industry. "It just points out that there's simply no need for this legislation, and I believe that Verizon was being completely honest with its investors."

Verizon spokesman Phil Santoro said there was no contradiction between Toben's statement to investors and the message the company has sent to state officials.

"We're still getting franchises; we haven't been turned down. But what she didn't point out is that we can get them -- but how long does it take," he said. "We all recognize here at Verizon, that although we are able to attain franchises in Massachusetts, we're not doing it as quickly" as it should be done.

So far, 13 states have passed legislation that allows the state to grant cable franchises.

Cable companies oppose the legislation on Beacon Hill because it would change the rules they have been following for years and ease a competitor's entrance into the marketplace. Municipal officials want to retain their power to negotiate the specific terms of the licenses, and say they are concerned that the bill's provisions prohibiting "redlining," when companies do not build service in less affluent neighborhoods, are not strong enough.

Verizon began to build its fiber-optic , or FiOS, network capable of delivering high-speed Internet and video in 2004. While Verizon is free to offer Internet service to customers immediately, the company must seek approval for cable franchises from individual cities and towns to offer video. So far, the company has received approval to offer video in 49 communities, with 19 applications pending. The company has said it does not plan to apply for more licenses until its current projects are complete.

Panagiotakos said he plans to recommend today that the Joint Committee on Utilities, Telecommunications, and Energy create a task force to examine the issue in detail.

Meanwhile, the opposition has been readying for a fight.

The New England Cable and Telecommunications Association, which represents the cable industry, has purchased radio ads opposing the legislation, and the Massachusetts Municipal Association created a task force to fight it.

"Verizon is trying to change the rules to benefit their own business plans," said Geoffrey Beckwith , executive director of the Massachusetts Municipal Association. "But cities and towns have not only a legitimate, but a very positive role to play. They are the protectors of the public interest in awarding cable licenses."

Carolyn Y. Johnson can be reached at cjohnson@globe.com.