WASHINGTON - In an effort to bring video choice and competition to citizens of Montgomery County, Maryland, Verizon today filed a federal lawsuit against the county for its unreasonable and illegal cable-franchising process and demands.
The suit, filed in U.S. District Court for the District of Maryland in Greenbelt, asks the court to declare that Montgomery County's cable franchise process and requirements violate federal communications and antitrust law, as well as the First Amendment to the U.S. Constitution.
Verizon is asking the court for a preliminary injunction invalidating Montgomery County's current cable franchising law and directing the county to negotiate a franchise with Verizon on lawful terms within 60 days. At the same time - in an effort to help speed the negotiations to resolution - Verizon is asking the court to invalidate the numerous unlawful requirements the county is attempting to impose on the company.
"Verizon regrets having to take this step, but the county's unlawful demands leave us no other choice," said John P. Frantz, Verizon vice president and associate general counsel, who is leading the company's legal team on the case. "We would prefer to reach agreement on a franchise that would offer Montgomery County consumers more choice for their cable services, but after a year of essentially fruitless negotiations, we are at an impasse."
Over the year that Verizon has been negotiating to obtain a franchise to offer its FiOS TV in Montgomery County, county officials have made numerous unlawful demands that have stymied the negotiations. For example:
- The county asserts the right to collect fees on, and otherwise regulate, Verizon's telephone and broadband Internet service, in clear violation of federal law. In addition, the county claims authority to regulate the engineering, construction, placement and maintenance of Verizon's entire fiber-optic network once the company starts offering video service, again in clear violation of federal law.
- The county is demanding that Verizon set aside roughly 65 channels of digital capacity for public, educational and governmental programming, even though the county currently has programming for only 11 channels. Verizon wants to use the channels the county is insisting the company set aside to deliver programming that county residents want to see.
- The county is demanding that Verizon pay hundreds of thousands of dollars to cover the fees that the county owes to its own private consultants and attorneys; federal law forbids such demands.
- The county is demanding additional cash and free services as a condition for granting a franchise; it has no right to demand such terms under established federal law.
"We're frustrated at the lack of progress in these negotiations, because the inordinate delay benefits only the monopoly cable incumbent," said Frantz. "Meanwhile, Montgomery County residents continue to suffer, held hostage to Comcast's ever-rising cable rates."
Comcast has increased Montgomery County cable rates more than three times the inflation rate since 2000. In Montgomery County, the stalled franchise negotiations are costing county households more than $725,000 a month in possible savings.
"Competition will bring lower prices, more innovation and better quality," said Frantz. "It's past time for Montgomery County residents to join their neighbors in Howard County and Northern Virginia who are reaping the benefits of cable competition and choice."
Montgomery County is the only place in the Washington metropolitan area where Verizon has sought a franchise and has not been able to obtain one. In Maryland, Howard County, Bowie and Laurel have all granted Verizon a franchise; Anne Arundel County is poised to do so July 5; and Verizon's negotiations with Prince George's County are on track for an agreement by late summer. In northern Virginia, Verizon has obtained franchises from Arlington, Fairfax, Loudoun and Prince William counties; the City of Fairfax, Dumfries, Herndon, Falls Church and Leesburg; and the Marine Corps Base at Quantico.
In other markets where Verizon has introduced FiOS TV - including neighboring Howard County - cable incumbents have responded with lower prices, more innovative bundled offerings of phone, broadband and video service, and increased broadband speeds.
Verizon's standard FiOS TV package, FiOS TV Premier, offers 180 digital video and music channels, two dozen high-definition channels and access to an extensive on-demand library for $39.95 a month. Comcast's most comparable cable package costs $68.60 in Montgomery County.
A family that switched to Verizon's video offering would save more than $300 a year and get more for its money. Verizon currently offers numerous other channels not provided by Comcast, including the Mid-Atlantic Sports Network, which broadcasts Washington Nationals baseball games.
The competitive response to Verizon's entry to the video market is swift and dramatic. In communities where Verizon already is offering FiOS TV, incumbents initially responded by slashing prices by 28-42 percent.
"Verizon's interest in this is simple," said Frantz. "We want the ability to bring choice and competition to Montgomery County consumers as quickly as possible, and we want Montgomery County officials to do the right thing by their constituents to make that happen."
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 53 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 250,000 and generates annual consolidated operating revenues of approximately $90 billion. For more information, visit www.verizon.com.