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Verizon bids to sidestep local cable TV controls

The company is asking the state to excuse it from the time-consuming process of reaching agreements with local governments.

By LETITIA STEIN and LOUIS HAU
Published March 3, 2006


TALLAHASSEE - Aiming to bring television into Florida homes through a new fiber-optic network, Verizon Communications wants state lawmakers to let the company sidestep local government control.

If made law, the proposal could enable Verizon to launch TV service much faster in the Tampa Bay area by allowing it and other new pay-TV providers to negotiate statewide franchise agreements.

That would enable them to avoid the time-consuming process of reaching agreements with every local government in the areas they want to serve.

But the proposal is facing strong opposition.

Bay area municipalities and counties oppose the plan, fearing they will lose the right to demand service in all neighborhoods, not just wealthy ones. They also want to safeguard public benefits such as educational access channels.

And cable companies such as Bright House Networks, which dominate the markets, have cried foul. They are preparing for an expensive political battle.

"They want special treatment," said Steve Wilkerson, president of the Florida Cable Telecommunications Association in Tallahassee. "It's a really bold, heavy-handed effort to provide them with competitive advantages."

Verizon spokesman Bob Elek said the central issue is injecting competition into the market for pay-TV services, which would benefit consumers.

"We'd prefer to do that sooner rather than later," he said.

Florida is the latest state to experience a high-stakes battle over the right to sell household entertainment packages. Texas Gov. Rick Perry signed a bill last year allowing state-level pay-TV franchise contracts. Earlier this week, state lawmakers in Indiana and Virginia passed similar legislation.

Verizon, the dominant land-line phone company in Pinellas, Hillsborough, Pasco, Polk, Manatee and Sarasota counties, has spent hundreds of millions of dollars laying fiber-optic cable in preparation to provide pay-TV services, as well as premium high-speed Internet and phone services.

But it needs local permission first.

Cities and counties control TV franchise contracts, because the industry historically has rolled out cable lines along public rights of way. To launch TV service in Florida, Verizon needs agreements with more than 60 governments.

So far, it has four.

Verizon has agreements to serve residents in Hillsborough and Manatee counties' unincorporated regions, as well as in the cities of Temple Terrace and Bradenton. It is negotiating with the city of Tampa, and Pasco and Sarasota counties.

"Pinellas is probably a huge headache because you have 24 cities and the county that they have to negotiate with," said Jim Bennett, chief assistant county attorney. He received a call about a year ago from Verizon inquiring about the county's interest in a franchise.

"I said, "Sure, no problem,' " Bennett said.

But it will take time.

To speed up the process, Verizon has helped draft legislation pending in the Florida House that would establish state-level franchise agreements, eliminating the gate-keeper role of local governments.

Prospective cable providers simply would apply to the state for a franchise - and check off the various communities that they wish to serve.

"This is an idea whose time has come," said Rep. Trey Traviesa, R-Tampa, who is sponsoring the legislation known as the Consumer Choice Act of 2006. "If local government is going to stand between the competition and the consumers, then they're taking money out of the pockets of those consumers," Traviesa said.

Around the state, local governments are organizing in opposition. They outlined concerns during a telephone conference call on Wednesday.

In the Tampa Bay area, they fear Verizon could roll out services only in lucrative areas, such as affluent suburbs and densely developed communities.

"We can force them to cover the entire city, instead of cherry-picking the good parts," said St. Petersburg City Council member John Bryan. "They often don't want to go into low-income areas."

While the legislation states that cable providers can't deny service based on income levels, it prohibits the state from determining how broadly a company that is awarded a franchise must provide service in a given area.

"Throwing that in the mix just further complicates the issue," Verizon's Elek said. "We want to go where the market is, rather than by government fiat."

Critics of state-level franchising also expressed concerns about the impact on public access channels and on governments' ability to negotiate greater financial contributions for such operations.

Currently, local governments can negotiate funding for public, educational and government channels. The contracts set the number of channels a company has to provide.

The legislation would require new cable providers to offer the same number of public channels as the dominant cable company in the area.

If none is in place, the company would have to offer three access channels in areas with a population greater than 50,000, and two in communities with fewer than 50,000 residents.

Traviesa's House bill lacks a Senate sponsor, which could diminish its chances.

But opponents are warily watching Sen. Mike Bennett, R-Bradenton, who has an open-ended bill "to revise laws relating to franchise agreements with local governments." He could not be reached for comments.

The cable industry anticipates a well-financed brawl with the phone industry.

Verizon is leading the fight nationally to do away with local controls over cable TV.

Two weeks ago, Verizon chief executive Ivan Seidenberg told the U.S. Senate Commerce Committee that "today's video franchising laws are out of date with technology, out of touch with consumer demands, and serve mainly to delay competition and deny choice for consumers."

Bright House Networks, the Tampa Bay area's leading cable provider, says other companies can get into the pay-TV market right now. But just like Bright House, they should have to negotiate with local governments, not swoop in under state contracts.

"We really can't see much benefit," said Bright House spokeswoman Kena Lewis. "The consumers certainly wouldn't benefit. Can you imagine having to call Tallahassee if you have a problem with your cable service?"

Letitia Stein can be reached at lstein@sptimes.com or 850 224-7263. Louis Hau can be reached at hau@sptimes.com or (813) 226-3404.

[Last modified March 3, 2006, 02:15:34]


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