Cable-franchise Measure Needs Retooling

The Record / — Tuesday, May 30, 2006



As the executive director of New Jersey's largest citizen watchdog organization, I hear lots of complaints about cable companies. Consumers are mad about high rates, frustrated by the inability to chose from competing companies for service, and they don't like having to pay for programming they never will or want to watch.

Second to the number of complaints we get about cable are complaints about the phone company. So the ongoing war between the state's cable and telephone industries for market share in the cable TV business and the exorbitantly high-priced political campaign that each side has waged to win over state and municipal politicians has been fascinating.

Verizon last week won a big battle in this war when the Assembly passed a bill that would provide the company with a systemwide franchise to begin offering its TV (FiOS) services, bypassing a 30-year process requiring cable companies to negotiate agreements on a town-by-town basis.

Having already passed the Senate, the bill is expected to sail to the governor's desk. Verizon argues that establishing a systemwide franchise will allow it to offer their products more quickly, ushering in a new age of cable competition that will lead to lower rates.

Unfortunately, the bill is not all that it is cracked up to be.

Although a number of legislators, particularly Assemblyman Wilfredo Caraballo, D-Essex, have worked diligently to try to ensure that all New Jerseyans have universal access to cable competition and today's broadband technologies, the legislation fails to reach this critical threshold. And the majority of our elected representatives have failed to grasp that competition works best when consumers can pick the company they want, not when the company can pick the consumers they want.

Shortcomings in measure

Franchise agreements spell out the type, quality, and level of service a company will provide to a municipality and allows the company to build on public property. In exchange for its access to our rights of way, the company pays the municipality a fee, or "rent."

While the Assembly bill gives Verizon access to the entire state's rights of way, it fails to require that it offer services to every citizen. Verizon is only required to build its system in our 60 most-populous municipalities and county seats, leaving the company free to ignore the vast majority of the state's 566 municipalities, where more than half our population lives.

If you live in Allendale or Clifton or Teaneck – which have the fiber-optic service – or in any one of the hundreds of municipalities left behind, Verizon will have no obligation to provide the service, even though it has access to the rights of way in your municipality that you support through your tax dollars.

And if this giveaway isn't big enough, Verizon can dodge its responsibilities in these 60 towns. The law includes a loophole big enough for a Mack truck to drive through. Verizon can decide, on its own, that an area is not "commercially viable," and exempt itself from providing fiber-optic service to those consumers.

We believe the ability of an industry to redline communities it deems undesirable or cherry pick customers it sees as most profitable is discriminatory and should not be allowed

Technological advances have given way to huge changes in the day-to-day information transactions of our lives. These changes have altered the nature of what we once thought of as "phone lines" and the television marketplace.

Regulatory changes in how franchise agreements are negotiated are warranted, not only to foster fair competition but to ensure that everyone in our state is included in the Internet era in the same way that the 1934 Universal Service Act made sure every household in our country would have access to a telephone line.

If we do it, do it right

The cable franchise bill passed by the Assembly and Senate fails to recognize that precisely because of these technological advances, universal service is more important than it was seven decades ago. We are not opposed to a statewide franchise but it must be done the right way.

Because the legislature has taken a short-sighted approach to resolving the battle between these two industries, the digital divide between low and high income New Jerseyans will likely worsen if this bill becomes law.

We hope Governor Corzine will see these weaknesses, conditionally veto the bill, and send it back to the legislature for the additional work it needs.

Phyllis Salowe-Kaye is executive director of New Jersey Citizen Action.