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Council Resolution 143-205 Verizons Proposed Franchise Agreement
1) Verizons proposed franchise is bad for Howard County residents.
No minimum Construction Requirements Verizon has no minimum construction requirements for its initial build-out. Almost half of County residents will not have cable competition.
Response: This is false. First, construction of Verizons FTTP Network upgrade to a fiber optic system is being done under its authority as a Title II common carrier telecommunications services provider under federal, state and local law. However, the franchise agreement does provide timetables for the deployment of Cable Services all of the initial service area within 3 years and the rest of the entire County within 7 years. Verizon is REQUIRED to offer cable services to ALL residential areas in their initial service. 85-90% of the population of Howard County resides in this area. Further, Verizon is required to provide service to significant numbers of subscribers in this area within 24 months. This is a more stringent construction requirement than Comcast obtained as a result of Comcasts franchise renewal in 1995. Comcast was provided 4 years, or 48 months, to construct an upgrade to their cable system in a geographical approximately 30% smaller than Verizons initial service area. Both Comcast and Verizon are required to make cable services available to residential dwelling units in their service area where the average density is equal to or greater than 30 occupied residential dwelling units per mile.
36-Month Opt Out Provision Verizon can opt out of its franchise obligations after 36 months with no penalty or continuity of service protection for customers.
Response: Verizon cannot do this unless it has failed to effectively compete against Comcast throughout the entire state of Maryland. In addition, Verizon will provide for a 90-day continuation of service during which time subscribers can switch back to Comcast or to another video provider. The general concept of continuity of service is really only relevant when there is a single cable service provider.
No Requirements for Customer Notification of Changes in Rates Verizon is not required to notify customers or the Local Franchising Authority (LFA) of changes in its rates.
Fairfax County recently (October 2005) signed a new franchise agreement with Verizon. Compare these customer notification requirements in the Fairfax agreement:
Customer notification by cablecast 60 days notice.
Written customer notification 90 days notice.
Comcasts Franchise requires 30 days written notice to customers and the LFA.
Response: This is absolutely false. Verizon is subject to the same 30-day notice requirement as Comcast under Section 14.414(f)(2) of the Cable Act. Further, Verizon is subject to all the identical customer service standards as Comcast under Sec. 14.414 of Howard Countys Cable Act.
No Required Business Office in the County Verizon is not required to provide a local Business Office. Where will customers pay their bills, pick up and return equipment or speak in-person to a Verizon representative?
Response: Verizon will provide convenient bill payment alternatives to its customers, as it does with its existing telephone and data customers. Currently, Verizon utilizes a number of bill payment agents in and around Howard County where customers can make payments in person, if they choose to do so. Verizon is required to establish offices, pick up and deliver from and to the Subscribers homes, use prepaid mailers and/or establish drop off locations for equipment.
Note: More than 76,000 customers visited the Comcast Local Business Office in Howard County in 2004.
Service Outages Verizons proposed franchise makes an exception to current Howard County Cable Law.
Current Cable Law, which defines a system failure as 30 or more subscribers out of service.
Response: The 30 subscriber reference does not apply to service outages or interruptions. It is contained in the definition of "system malfunction" in Section 14.402(w) of the CableAct, which relates to unsatisfactory service. System malfunction then appears only in Section 14.431(b)(5) of the Cable Act, which simply provides that the Cable Administrator may accept, investigate and seek correction of subscriber complaints about system malfunctions. The concept of a service outage or interruption isentirely different and consists of a total loss of picture or sound (Section 14.414(a)(3) of the Cable Act) and is employed in the customer service sections of the Cable Act for an entirely different purpose. Thus, this appears to be an attempt by Comcast to inappropriately apply a provision, which has an entirely different purpose and use to customer service requirements.
Verizons franchise defines significant outage as 10 percent of subscribers.
Response: Since there is no Cable Act requirement, Verizon and the County are able to define this however they mutually deem appropriate. In addition, Verizon is required to provide credits to subscribers for service interruptions of 4 or more hours whereas Comcast does not.
Consumer Complaints Verizon is not required to include the LFAs name and contact information on subscribers bills to report complaints about Verizons service to the County.
Response: Misleading. As previously noted, Verizon is subject to all identical customer service standards as Comcast under Sec. 14.414 of Howard Countys Cable Act. This includes Sec. 14.414 (f), which requires Verizon to provide all subscribers At the time of installation of service, at least once annually, and at any time upon request, various written information. This includes Billing and complaint procedures, including the address and telephone number of the Howard County Cable Administrator.
2) The proposed franchise limits Verizons accountability and risks and undermines the Countys authority to monitor the implementation of Verizons cable service to ensure that Howard County residents benefit from competition.
Limited Built-out Requirements/Provision of Service
Initial Service Area applies to about of the County geographically Allows Verizon to build-out over 36 months for significant numbers of residents.
Response: False. Verizon is REQUIRED to offer cable services to ALL residential areas in their initial service area within 3 years. 85-90% of the population of Howard County resides in this area. Further, Verizon is required to provide service to significant numbers of subscribers in this area within 24 months. This is a more stringent construction requirement than Comcast obtained as a result of Comcasts franchise renewal in 1995. Comcast was provided 4 years, or 48 months, to construct an upgrade to their cable system in a geographical approximately 30% smaller than Verizons.
No required start-service date is included in the franchise.
Response: Verizon will initiate the required actions to make cable service available in Howard County promptly after the franchise agreement becomes effective. Why would a company invest 100s of millions of dollars in construction costs and not seek a return on investment as quickly as possible?
No minimum build-out requirements are included in the franchise.
Response: Misleading. A Title II issue and not relevant. See response above.
No reporting requirements to the County on status of its build-out.
Response: Same. A Title II issue, governed by Howard Countys Utility Agreement, which is administered by our Department of Public Works.
No penalties for failure to comply.
Response: False. Liquidated damages would apply to Cable Service deployment violations, just as they do to Comcast.
No recourse if Verizon opts out without serving a single resident.
Response: False. Verizon must provide service to a significant number of residents in the initial service area within 24 months of the Service Date. Otherwise, Verizon would be subject to liquidated damages.
Extended Service Area built-out over 7 years.
Response: The FTTP fiber network upgrade is being constructed on a wire center by wire center basis over time. The extended service area, where 10-15% of Howard County residents reside, is required to be completed with 7 years.
Fairfax County recently (October 2005) signed a new franchise agreement with Verizon. Compare these time-frames in the Fairfax agreement:
Within 12 months significant number of residents.
Response: Verizon has agreed to provide service to significant number of residents in Howard County within 24 months. The construction of the FTTP fiber upgrade was started approximately one year earlier in Fairfax.
Within 36 months all subscribers.
Response: This applies only to the initial service area, and it is the same for Howard County the Fairfax extended service area is also the same 7 years.
Failure to comply within required time-frames is a material violation and liquidated damages apply.
Response: Yes, and as noted above, liquidated damages would apply in Howard County as well.
If the County Council approves Verizons franchise agreement as is, almost half of County residents will not have cable competition.
Response: Absolutely false. Verizon has committed to serve the entire County, and as previously noted, is required to offer services to 85-90% of the Countys population within 36 months.
36-Month Opt Out Provisions
VZ may opt out to stop providing cable service after 36 months, if its subscriber base is not substantial and it terminates all systems within Maryland. Can consider subscriber penetration outside the Franchise Area.
No Remedy or penalty included only 120-day notification to customers.
Response: Verizon is spending millions to provide FiOS and FiOSTV service to Howard County, but if the Cable Service business does not succeed, Verizon would have to consider its options. Subscribers would continue to have cable service available from Comcast and will have plenty of time to transfer to a different provider.
No Rate Regulation by the County
Verizons proposed franchise prohibits rate regulation by the County even for Basic Service rates.
Verizons Rate Structure is not included with the agreement.
Response: This is one of the more inane comments by Comcast (among many). First, the agreement does not prohibit rate regulation if federal law would permit it. However, Verizon will be subject to effective competition from Comcast from the get go, and its rates will therefore not be subject to regulation under the federal Communications Act, 47 USC 543. Notably, as soon as Verizon begins service, under Section 543 of the Communications Act Comcast will also be considered subject to effective competition and will be able to free itself from rate regulation as well.
3) Verizons Proposed Franchise Does Not Create Level Playing Field for Cable Competition In addition to the points already presented in this document:
Response: The level playing field requirement of the Comcast franchise specifically covers financial, operational and customer service. Level playing field is interpreted to mean level on an overall basis taking into consideration the franchises as a whole - not provision by provision. The Verizon franchise is level with Comcasts in these areas on an overall basis and, in fact, exceeds Comcasts current financial obligations. The Verizon franchise agreement is also level in all other areas of particular importance to the County, such as service area, PEG channels and grant, term, service to public buildings, police power, insurance and indemnification, liquidated damages and access to records.
Verizon is requesting changes and/or exceptions t current Howard County Cable Law that gives it special privileges not afforded to other cable providers.
Response: The only exceptions apply to construction and other matters specific to Verizons status as an incumbent local exchange common carrier under Title II. The other changes apply equally to Comcast.
Comcast is preparing a more detailed analysis of each section of Verizons proposed franchise agreement and will provide it to County Council members.
Verizons agreement contains a provision that allows the County to illegally misappropriate Comcasts private property, if an interconnection agreement cannot be reached with Verizon.
Response: Is Comcast implying that it will not agree to interconnect PEG channels on a reasonable basis? Is it asserting that it owns the PEG programming and channels?
Verizon is permitted to substantially comply with applicable law. What does this mean? Isnt the law the law?
Response: Do not know where this comes from. Section 2.1 of the Verizon franchise provides that it will abide by the Cable Act, which is the exact same language as contained in the Comcast franchise.
The franchise states that Verizons franchise shall (shall is defines as must) be liberally construed to effectuate its objectives.
Response: This is contained in Section 2.7.1 of the Verizon franchise. It is modeled on typical cable franchise language, and this exact same language is contained in the Comcast Montgomery County, MD, franchise.
Council Bill 74-2005 Changes in Howard County Cable Law Subtitle 4, Sec. 14
Introduction
Verizon is requesting the County Council to approve sweeping changes in the Howard County Cable Law.
Response: The changes are not sweeping. The vast majority of the proposed changes pertain to the acknowledgement that Verizon is a Title II common carrier. As such, potential legal issues with respect to several provisions in the Cable Law have been realized, and have been addressed.
Verizons proposed cable franchise agreement gives Verizon special privileges and exemptions.
Response: Nothing special about it. Verizon is simply an ILEC, not a cable operator, and that is what distinguishes it from Comcast.
These changes are not good public policy and bad for consumers.
Response: The Utility Agreement covers all relevant exceptions. Specifically, how is the agreement bad for consumers?
The County Council should have serious concerns with Verizons requests.
Response: Why?
The attached presentation analyzes changes in Howard County Cable Law and with Verizons proposed Franchise Agreement.
Verizon is requesting sweeping changes to Howard County Law that gives Verizon special privileges and/or exemptions from the law.
How does Verizons Common Carrier status exempt it from the Howard County cable law?
Response: It does not exempt it from the Cable Act, but unlike Comcast, Verizon does not need a cable franchise to construct its FTTP Network telecommunications facilities. It has that authority under federal and state law and tariffs and Howard Countys Utility Agreement. The exceptions Verizon seeks relate directly to this fact. Therefore, this bill proposes in proposed new subsections D and E that several provisions of the Cable Act would not be applicable to the facilities of a common carrier when it also provides cable services through its facilities. Right of way issues associated with Verizons construction and physical presence in our rights-of-way are addressed and governed by the Howard County Utility Agreement.
Shouldnt all cable services in the County be regulated the same?
Response: They are regulated the same; interestingly, Comcasts Non-Cable Services are not regulated whereas Verizons are.
Verizon officials have testified that its FTTP system will deliver video programming as well as high-speed Internet service and VoIP, the same services that Comcast provides over its cable system. This system will not be used by Verizon to provide traditional plain old telephone service (POTS) over copper pairs, which defines it as a Common Carrier.
Response: In fact, the new fiber system will replace the existing copper telephone system for Subscribers to FiOS, so Comcast, once again, is just plain wrong.
Verizon cant have it both ways and should not be exempt from this section of Howard County Cable Law.
Response: Comcast does not have it both ways. The County is merely recognizing and acknowledging the distinction between Title II common carriers, and Title VI cable operators as defined by Federal law.
Verizons request for changes in the current Cable Law combined with several exceptions to the law in its proposed franchise is bad for Howard County consumers.
Exempts Verizon from mandatory requirements for Continuity of Service (Sec. 14.424)
This exemption is especially onerous, because in Verizons proposed franchise, there is a provision, which lets it opt out of providing cable service to Howard County residents after 36 months.
Verizon can just simply walk away with no penalty and no transition plan for its subscribers.
This is wrong and the County Council should not allow Verizon to be exempted from the law.
Response: Verizons facilities are a multi-purpose telecommunications plant the possession of which cannot be taken by the county (14.424(c)) if Verizon ceases providing cable service, and if it should do so it will give 90 days of continuity so subscribers can transition to other available service providers. Besides this kind of protection is really only relevant when there is a single provider. Does one really think that Comcast would be upset if Verizon ceased to compete?
Verizons requests for changes in current law undermine the Countys authority to oversee the provision of cable service to Howard County residents.
Excludes Verizon from virtually every provision for the Use of Rights of Way (Section 14.416).
Response: These are Title II construction related requirements that are covered by the Countys Utility Agreement.
Exempts Verizon from the requirement to notify customers and/or the LFA during Construction Customer Service Requirements Sec. 14.414(h)
Utility Agreement In lieu of abiding by the law, Verizon is requesting that the County approve a Utility Agreement, which grants special privileges to Verizon during Construction, including blanket permits.
Response: The Utility Agreement is already in place. It was negotiated and signed early this year and has nothing to do with the provision of Cable Services.
Verizon was allowed to apply for blanket permits during its construction of its FTTP project. The allowance of blanket permits proved Verizons inability to manage the project effectively, causing damage to other cable, electric and gas facilities and outages to thousands of customers.
Response: This has nothing to do with the cable franchise. This is handled by DPW.
Verizon should have to follow the same requirements that the County requires of other cable providers.
Response: It does, but under its existing Title II status.
Verizon is requesting changes in the current law that eliminates the Countys authority to enforce remedies (Sec. 14.422(a)(2,3)) that protect its residents.
Response: The section reference must be a misquote. In fact, the franchise agreement specifically incorporates the revocation procedures of Section 14.422. However, as a Title II common carrier, Verizon would be exempted from Subsection (f) of 14.422, which allows the County to require removal of facilities, the right to purchase it and the right to sell same. Obviously, the County cannot take such actions against Verizons Title II telecommunications facilities. In fact, to do so would violate federal law, 47 USC 541(b)(3).
The changes to current Cable Law that Verizon wants the County Council to approve give Verizon an unfair competitive advantage in Howard County.
Response: Untrue. If Comcast were also providing telecommunications services it would also be protected by 47 USC 541(b)(3).
WHAT SHOULD THE COUNCIL DO?
Please review the regulatory changes.
Comcast is asking the County Council to step back, pause, and not rush to judgment in making sweeping changes in the law that only benefit Verizon.
Response: It is clear that Comcasts comments are inaccurate, false, and misleading. With all due respect, they appear to be a concerted effort to cause confusion, so that an agenda of delay can be realized enabling Comcast to continue to operate as a de-facto monopoly.
WHAT SHOULD THE COUNCIL DO?
Consider the effect of Verizons proposed franchise agreement on Howard County residents.
Response: Yes, please do. By approving Verizons franchise, 85-90% of Howard County residents will have a choice of cable operators within 3 years. The remaining 10-15% of residents will have that choice within 7 years. Our citizens will also be able to realistically expect a stabilization of cable rates, and perhaps as much as a 15% decrease in rates as well as improved customer service.
Send the Verizon proposed franchise agreement back to the County Executive to resolve issues.
Response: What issues? A work session to further educate, explain, and address specific questions might prove beneficial to Council. The issues Comcast has raised are largely misrepresentations and falsehoods. The simple matter of the fact is a policy decision. Does Council wish to acknowledge Verizons Title II status, or not? Every other community that has approved a Verizon cable franchise has done so.
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