Pennsylvania Consumers Need Choice and Competitionfor Cable TV, Says Verizon Pennsylvania President

PITTSBURGH - Few things in life are more certain than higher 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 on House Bill 2880.

Introduced at the end of June by state Reps. Raymond Bunt Jr. and Joseph Preston and co-sponsored by 81 House members, the bill aims to streamline the state's existing cable franchising rules to accelerate the pace of meaningful cable television competition and choice for Pennsylvania consumers.

William B. Petersen, president of Verizon Pennsylvania, testifying at a hearing of the House Consumer Affairs Committee at the David L. Lawrence Convention Center, told members that with the passage of this legislation, ordinary Pennsylvanians will be the big winners.

"They will see something they have never seen before – a decrease in their cable rates – and they will experience exciting new choices and a far superior customer experience," said Petersen. "But all of this is possible only if you streamline the current process by putting consumers, rather than cable companies, first." Petersen said that Pennsylvanians are being denied the benefits of competition by an antiquated cable franchise system that was put in place decades ago – a system that today protects cable companies, not consumers.

"Since 1995, cable rates have increased more than 86 percent," said Petersen. "Earlier this year, Comcast raised its Pennsylvania cable rates again and raised them significantly – 6 percent – unless you live in parts of Pittsburgh, in which case the rate increase was 9 percent.

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

Petersen discussed Verizon's massive effort to upgrade its existing network by connecting customers directly to Verizon’s network with fiber-optic cables, offering them enormous benefits – greater capacity, greater speed and greater reliability. In Pennsylvania, Verizon has already brought this new fiber network to approximately 200 communities, including many which are racially and economically diverse.

But, he explained, Verizon's efforts to offer customers cable choice have been stymied by an old and outdated cable franchising process that delays entry into the market.

According to Petersen, in the more than 1,600 municipalities where Verizon today offers telephone service – municipalities where Verizon already has the authority to build and operate its network to provide voice services and Internet access – Verizon must nevertheless negotiate a second authorization from every single community to use this network just to offer cable TV service.

"Verizon has been at it for more than a year in Pennsylvania, and so far we have obtained only 25 franchises," said Petersen. "And, while that pace may be good news for cable companies, it is anything but good news for consumers."

According to Petersen, a streamlined process will attract new cable providers that, depending on their business plans, can provide rural, suburban and urban Pennsylvanians with their first real alternative to their existing monopoly provider.

"Look at what happened in Texas after that state’s Legislature adopted legislation very similar to the bill you are considering," Petersen told the committee. "Within a year, more than 20 competitive cable providers obtained state-issued franchises to serve Texas communities."

He 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 HB 2880. The bill:

  • Does 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.

    Does not strip local jurisdiction over public rights-of-way.

  • Requires 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.

  • Honors 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 cable companies have been demanding a build out requirement but they do so only to thwart competition. He pointed out that cable companies have no such requirements when they offer telephone service, and the Texas legislation, which has no build out requirement, has attracted more than 20 competitive cable providers.

"Cable's demand for a build out should be seen for what it is – nothing but an attempt by cable to maintain and protect the monopolies they have enjoyed for decades," 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.