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Tampa gets second cable TV provider

By RICK GERSHMAN, JANET ZINK and LOUIS HAU
Published May 11, 2006

TAMPA - Residents will have a choice of pay-TV services with a vote Thursday by the city council that opens the market to competition between current provider Bright House Networks and rival Verizon.

City Council members unanimously approved a franchise agreement with Verizon, saying the change should drive down costs for customers.

"We are ready to begin taking orders Monday," said Alan Ciamporcero, Verizon's southeast president.

Hillsborough County reached a similar agreement with Verizon in February.

First eligible for Verizon's city service are about 44,000 households in the University of South Florida area, Hyde Park, Seminole Heights, Sulphur Springs, Beach Park and Bayshore Beautiful sections of Tampa.

To prepare for its planned launch, Verizon has been laying miles of fiber optic cable in the city right of way for the past two years. The contract requires Verizon to wire the rest of the city and make services available to all residents within five years.

"The winners today are our citizens," council member Shawn Harrison said. The deal ensures "increased choice and decreased costs for everyone."

"Competition is a great thing - it's what our country was built on," council member John Dingfelder said.

The agreement came after Verizon made concessions Thursday on a few sticking points, particularly Bright House's contention that Verizon would receive too sweet a deal.

In order to provide pay TV services that compete with Bright House and other cable companies, Verizon is required to provide public, educational and government access channels - known as PEG channels - and money to support them.

City attorneys negotiated a 15-year agreement with Verizon that required the company to provide six PEG channels and $1-million to the city, plus 65 cents each month for every Verizon subscriber.

Bright House's agreement requires six PEG channels and $6.25-million in support, payable in several lump sums.

Bright House argued the Verizon agreement didn't meet state laws requiring a level playing field. In a letter to city officials this week, Bright House threatened a lawsuit if the city approved the agreement as originally presented.

Thursday, the city asked Verizon to ensure that by the contract's end it will have paid at least $6.25-million in PEG support, and Verizon agreed.

Verizon also agreed to drop an option to cancel the contract after three years, and it agreed to use Channel 15 - the same channel Bright House uses - for government-oriented broadcasting.

During more than two hours of debate Thursday morning and afternoon, city attorney David Smith defended the agreement and urged the City Council to trust his judgment. "I'm the one who has to defend this in court," he said.

A level playing field doesn't mean the terms of the agreement have to be the same. It just has to have an equitable bottom line, he said.

Verizon's per subscriber fee was calculated to make sure that by the end of the 15-year contract, the company would pay about the same as Bright House for the PEG channels, he said.

The calculation assumes that Verizon achieves about a 30 percent penetration of the cable TV market , which is what Verizon has accomplished in other markets, Ciamporcero said.

Community members who spoke before City Council were concerned about the size of their cable bills in the absence of competition.

Tampa resident Michael Farmer urged the Council to approve the agreement, saying he's eager to see prices drop. With prices as they are, he subscribes to Bright House only during football season.

Louise Thompson, executive director of the Tampa Bay Community Network, also supported the agreement. She said she recently called Bright House about services and they offered her $23 off the going monthly rate as soon as she mentioned Verizon.

Bright House attorney Steve Anderson, said the contract changes "do a lot to bring Verizon's requirements closer to what Bright House has ... but does it make it as tough as ours? No."

Is there still the threat of a law suit?

"I can't answer that yet," Anderson said.

The franchise agreement with Tampa marks another major step forward in Verizon's plans to eventually sell pay-TV services throughout its national service territory, including in the six counties it serves in Florida.

Verizon is the dominant land-line phone company in Hillsborough, Pinellas, Pasco, Polk, Manatee and Sarasota counties.

Verizon's eagerness to sell pay-TV service is part of a broader battle being waged by phone and cable companies to offer residential customers a full menu of cable TV channels, broadband, phone and wireless services.

On Tuesday, the Pasco County Commission approved a franchise agreement with Verizon for unincorporated Pasco. Verizon already has launched TV service in Temple Terrace, parts of unincorporated Hillsborough County and unincorporated Manatee County. The company is in franchise talks with Oldsmar and Sarasota County.

With the exception of Oldsmar, Verizon hasn't yet initiated franchise talks in Pinellas County, where the company faces the daunting prospect of having to secure pacts with 24 municipalities. The company failed during the just-concluded legislative session in Tallahassee to get a bill passed that would have enabled it to negotiate a single state-wide franchise agreement.

If such a bill does pass in the future, Verizon's pact with Tampa would remain in place, according the terms of the agreement.

[Last modified May 11, 2006, 21:39:02]