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Verizon responds 

The distortions and inaccuracies in the article "400 channels and nothing for us?" (Monitor, March 8) requires a response. Perhaps the best way to provide balance to the topic of state-issued cable TV franchises is to look at the facts involved with proposals made thus far to the Revenue Laws Study Committee.

Most importantly, the objective of Verizon's proposal is to expedite and simplify the franchise approval process in the interest of bringing long-overdue competition and choice to captive cable customers. The Federal Communications Commission has found that in markets where a cable service competitor exists, prices are on average 15-20 percent lower. And a Phoenix Center study issued in February concludes that delaying franchise reform in North Carolina even one year will cost consumers $288 million in rates they can never recover without competition--an average per household of $94. These costs get even higher with each year competition is delayed. The best deal any municipality can make for its residents is to quickly create the climate for competition to exist in the cable television market and for residents to experience better prices and value as a result.

There were specific issues in the article that the facts refute:

Service. Local telephone companies all have a strong presence in their respective communities and currently provide tremendous service to their voice and broadband customers. This will not change with the addition of video offerings.

Public, educational and governmental access (PEG) channels. Verizon is proposing that all cable systems provide capacity for PEG channels and ensure availability of PEG channel content to all providers. We are not opposed to franchise fees to support PEG, but we believe there is a deleterious effect to consumers from additional cash demands for support. In a competitive market, those demands are passed back to consumers in the form of additional fees--in effect, hidden taxes--to offset the cost to the company.

Control of municipal rights-of-way and access to same. Our proposal preserves the right of state and local governments to manage public rights-of-way. As for access to rights-of-way, Verizon has had access to municipal rights-of-way in North Carolina for decades. We do not believe we should be considered a new occupant simply because a new or existing network can also support a video signal. Cable needed to negotiate this access when it first arrived since it had no access. Verizon should not have to duplicate its efforts simply to provide a new service.

Cherry-picking. This is another way of suggesting that Verizon would "redline" consumers, a practice that Federal Law directly prohibits and also provides for enforcement action if the law is violated. Further, Verizon has never discriminated when providing its services. Unfortunately, opponents are using unfounded accusations of redlining in an attempt to obscure the benefits of competition to consumers. The "cherry-picking" argument is a red herring. The reality is that subscription rates correlate little with income and local telephone companies entering the video market will compete for as many customers as possible. (George S. Ford, Thomas M. Koutsky and Lawrence J. Spiwak, The Consumer Welfare Cost of Cable "Build-out" Rules, Phoenix Center Policy Paper No. 22, July 2005, at 3 n. 3, citing economic literature.) Simply put, a competitor will go where the cable customers are, regardless of where they are located.

Under the current local cable franchising scheme, competition is stifled and consumers are denied choice and lower rates. Verizon's proposal is good for consumers and good for North Carolina. Let's focus on the real issue--competition in the cable TV market leads to lowers rates, and North Carolina consumers deserve lower rates sooner rather than later.

Joe Foster, Vice President--Public Policy & External Affairs
Verizon, Durham

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