Bloomberg Set to Negotiate Cable Deals

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The New York Sun

Mayor Bloomberg is gearing up to negotiate new cable franchises for the city, a move that could be a first step toward cheaper cable, Internet, and telephone service for New Yorkers and the end of the quasi-monopoly for the city’s two dominant cable companies.

While no companies are named in the mayor’s request to the City Council to negotiate the franchises, the telecommunications giant Verizon is lobbying hard to break into the city’s cable business, as it is all over the country.

Winning a franchise would be a huge victory for Verizon, which is rapidly losing market share to cable companies because it can’t provide the all-in-one connectivity packages its competitors offer.

“Verizon is losing money hand over foot — between the cable companies that offer different services and the cell phone companies,” the chairwoman of the council’s Technology in Government Committee, Gale Brewer, said. “In my office, there’s almost nobody who has a landline. To me, that’s like not having a house, but I can see that Verizon is nervous about its bottom line.”

Adding new franchises also could drive down prices, which now top more than $100 a month for a full-home hookup.

The commissioner of the city’s Department of Information Technology & Telecommunications, Paul Cosgrave, said the mayor’s resolution, which will be heard at the council August 14, will allow the city to negotiate cable television contracts “with any company that expresses interest.”

“Healthy competition is good for consumers in any market, including the cable industry,” Mr. Cosgrave said in a statement. “Should the resolution pass, we hope to receive a variety of proposals that would assure choice and quality for New York’s cable customers.”

A Verizon cable franchise would be a blow to Cablevision, one of Mayor Bloomberg’s biggest first-term adversaries, and Time Warner. The companies now deliver cable to the majority of city residents.

Ms. Brewer said she is in favor of increased competition and choice. But, she said, if Verizon was granted a franchise it could not “cherry pick” and offer services only to neighborhoods it views as potentially lucrative.

“Right now, the cable companies go wherever there is a resident in the city,” she said. “We want to make sure Verizon is required to do the same thing.”

The chairman of the council’s zoning and franchise subcommittee, Tony Avella, said the cable market “landscape has to change.” Constituents regularly complain about Cablevision’s service and its prices, he said, adding that the same is true to a lesser degree with Time Warner.

Mr. Avella also said he wants to review Cablevision’s franchise, which along with all the other cable franchises is up for renewal in 2008. The Long Island-based company, which owns Madison Square Garden, was at odds with Mr. Bloomberg last year when its owners fought the Jets stadium he wanted to be built blocks from its arena.

Verizon has not been shy about its desire to get into the cable business. The company — along with other telephone providers such as AT&T Inc. and BellSouth Corp. — has been lobbying for a national cable franchise that would allow it to bypass cities and states in getting permission to move in.

For now, it is pressing municipalities nationwide for individual contracts. It is also investing millions of dollars in fiber-optic networks that would allow it to deliver voice-over, high-speed Internet and telephone.

Ms. Brewer’s chief of staff, Bruce Lai, the former policy director of the council’s technology in government committee, said the resolution coming in front of the council is a clear sign that the mayor’s office is willing to negotiate with Verizon.

“Verizon’s DSL is not fast enough to offer triple play — cable, high-speed Internet, and voice-over IP,” Mr. Lai said. “They need to get fiber optics in as many homes as soon as possible. Their telephone business is being eaten up by voice-over IP and cell phones.”

A spokeswoman for Verizon, Heather Wilner, said only that the company has “had discussions with the city” and is “definitely interested in going into this business in New York.”

A Cablevision spokesman, William Powers, said the company does “support competition on a level playing field.” A Time Warner Cable spokeswoman, Suzanne Giuliani, said the same, noting that the company favors competition, but that any new franchisees should have “identical terms and conditions.”

The New York Sun

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