Pennsylvania Consumers Need Choice and Competition for Cable TV, Says Verizon Pennsylvania President

MEDIA, Pa. - Few things in life are more certain than rising cable TV rates, and competition from wireline cable providers is the one way to halt these increases and give consumers choice, Verizon Pennsylvania's leader today told state legislators at a committee hearing.

"Let's not confuse what is good for cable companies with what is good for consumers," said William B. Petersen, president of Verizon Pennsylvania, while testifying at a hearing of the Senate Communications and High Technology Committee at Penn State Delaware County.

Introduced in early June by State Sens. Dominic Pileggi and Anthony Williams, Senate Bill 1247 - known as the Cable Choice and Competition Act - aims to streamline the state's existing cable franchising rules to accelerate the pace of meaningful cable television competition and choice for Pennsylvania consumers.

"Since 1995, cable rates have increased more than 86 percent," said Petersen. "Since 2001, cable prices have increased four times faster than the rate of the Consumer Price Index.

"The Bank of America has found that in neighborhoods in Texas, Florida and Virginia in which Verizon is offering its FiOS TV services, cable subscribers are saving between 28 percent and 42 percent on their cable bills - more than $250 a year."

Testifying in support of cable franchise reform, Petersen stressed several times that the focus of the legislation - and legislators - should remain on consumers, who would benefit the most from increased cable choice. He explained how Pennsylvanians have been denied the benefits of competition by an antiquated franchise system that was put in place decades ago - a system that today protects cable companies, not consumers.

According to Petersen, even in the case of the more than 1,600 municipalities where Verizon today offers telephone service and where the company already has received approval to build and operate its network, Verizon must nevertheless negotiate a second authorization before it can offer cable TV service.

"This redundant, town-by-town process dramatically delays consumer choice and increases the cost of doing business," said Petersen. "Verizon has been at it for more than a year in Pennsylvania, and so far we have obtained only 22 franchises. And, while that pace may be good news for cable companies, it is anything but good news for consumers."

Other companies could benefit from a streamlined franchise process, said Petersen, because they cannot afford to devote the time and resources necessary to complete town-by-town negotiations, particularly when just one negotiation can take more than a year to complete.

"A streamlined process will encourage competition by attracting new cable providers," said Petersen. "For example, in less than a year since Texas adopted legislation similar to Senate Bill 1247, more than 20 competitive cable providers have obtained franchises to serve Texas communities."

Petersen said that some opponents who cannot defend the current franchise process as being good for consumers are invoking local concerns, but - contrary to their claims - the legislation continues to protect local interests.

Petersen clarified several misconceptions that opponents have spread about SB 1247. The bill:

  • Will not reduce franchise fees paid to Pennsylvania municipalities for the provision of competitive cable service. In fact, with passage of the legislation, franchise fee revenues paid to municipalities will likely increase.
  • Will not strip local jurisdiction over public rights-of-way.
  • Will require new entrants to provide public/education/government (PEG) channels and to be responsible, along with incumbent cable operators, for providing connectivity for transmitting PEG access channel programming.
  • Will honor current agreements. Verizon will comply with each agreement that it has signed with individual communities prior to the date of the enactment of the legislation.
  • Will improve customer service by promoting competition.

Petersen said that the competitive market, not a government-mandated directive distorting market forces, will best drive the construction and spread of new cable facilities. Without the benefit of the monopolies that were granted to incumbent cable companies, new cable competitors cannot be expected to build everywhere and at once.

"Let's not deny consumers the immediate benefits of cable competition merely because these benefits cannot immediately be available to all," he said.

Verizon Communications Inc. (NYSE:VZ), a Dow 30 company, is a leader in delivering broadband and other wireline and wireless communication innovations to mass market, business, government and wholesale customers. Verizon Wireless operates America's most reliable wireless network, serving nearly 55 million customers nationwide. Verizon Business operates one of the most expansive wholly-owned global IP networks. Verizon Telecom is deploying the nation's most advanced fiber-optic network to deliver the benefits of converged communications, information and entertainment services to customers. Based in New York, Verizon has a diverse workforce of more than 252,000 and generates annual consolidated operating revenues of approximately $90 billion. For more information, visit www.verizon.com.