Verizon Seeks Piece of City’s Cable Pie

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The companies that offer cable television services in the city should be kicked off “Easy Street,” an executive with the telecommunications giant Verizon says.

At a City Council hearing yesterday, the executive, Thomas Dunne, said that if his company is granted a cable franchise, the prices New Yorkers have been paying to get wired up at home will almost certainly decrease.

“Today New York City residents have but one choice for a wireline cable provider — whichever one happened to be granted a franchise in their neighborhood,” Mr. Dunne said. “For consumers, it’s been mostly a take-it-or-leave-it proposition for decades.”

The testimony was part of the council’s review of a resolution to allow the Bloomberg administration to renegotiate cable franchises with existing and new companies.

In the past, that process has been routine. Now, for the first time in decades, the companies that provide almost all of the cable hookups in the city, Time Warner and Cablevision, are facing another major competitor waiting in the wings to get into their business.

Mr. Bloomberg has said he is in favor of increased competition and his administration has given every indication that it will open the gates for Verizon and other companies to get into the very lucrative cable business. He has, however, recused himself from directly negotiating because Bloomberg News channels are carried on cable stations.

Also, Mr. Bloomberg was embroiled in a bitter standoff with Cablevision executives last year when they helped sabotage his proposed Jets stadium, which Cablevision viewed as competition to its arena, Madison Square Garden. In addition, the mayor is close friends with the CEO of Time Warner, Richard Parsons, who is co-chairman of his anti-poverty commission and has been named as a possible successor in City Hall. Thus, there are interesting political undercurrents.

For Verizon, getting into the cable business is a matter of survival.

The company is rapidly losing market share to its cable competitors, which have the advantage of being able to provide three-in-one connectivity packages. That so-called triple play includes cable, high-speed Internet access, and Voice Over Internet Protocol.

Yesterday, executives from Cablevision and Time Warner said they have no problem with competition, but said Verizon should have to abide by all of the same regulations that the existing companies have if the city grants it cable franchises.

That “level playing field” includes the fee that companies pay the city for the right to have a franchise (Time Warner paid the city $65 million in 2005, or 5% of its gross revenue). It also includes setting aside channels for public access and government usage.

Time Warner and Cablevision also called on the city to mandate a construction timeline for new franchise companies that would require them to provide service to every resident that requests it, and not just build its infrastructure in areas that it thinks will be lucrative.

“We realize that we will face more and more competition and we are ready to meet that challenge,” the president of Time Warner Cable of New York City, Howard Szarfarc, said. “We should not be disadvantaged, however, by having new entrants subject to lesser obligations unless our obligations are similarly reduced.”

Verizon, which has been aggressively trying to wiggle its way into cable markets nationwide, has been lobbying for a federal cable franchise that would allow it to bypass city and state regulations.

Yesterday, the company proposed blanketing the entire city with a new fiber-optic network, a construction project that could take years. Cablevision and Time Warner each said they wanted only to renew their existing contracts, which cover specific sections of the city. If Verizon is granted permission to carry out its plan, New Yorkers could eventually have a choice between Verizon and either Cablevision or Time Warner.

The chairman of the Zoning and Franchise Committee, Tony Avella, said many of his constituents have complained about their cable connections and that more competition is needed. He said the resolution would likely be passed next month, clearing the way for the Bloomberg administration to solicit competing proposals.


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