Newsday (New York)
February 16, 2006 Thursday
NASSAU AND SUFFOLK EDITION
By Peter Clark, Staff Writer
From Lexis Nexis
WASHINGTON – Telecommunication juggernauts Verizon and AT&T have been trying to extend their reach by supplying video and broadband Internet service to consumers during the last few years, but they have not been able to smoothly break into all markets.
The chief executives of Verizon and AT&T, Ivan Seidenberg and Edward Whitacre, argued before the Senate Committee of Commerce, Science and Transportation yesterday that Congress should encourage competition in the marketplace by removing the barriers and allow them to compete with local cable companies.
“The biggest limiting factor to how fast we can offer video over our fiber network,” Seidenberg said, “is the existing local franchise process that requires us to negotiate separate agreements with thousands of local franchise authorities all over the country.”
Supporters of the Video Choice Act of 2005 claim that by providing a national or statewide franchising system, suppliers could provide cable, video and Internet to subscribers with more choices, newer technologies and better prices.
In September 2005, Verizon began offering cable service in Keller, Texas. Shortly thereafter, incumbent cable operators offered customers price cuts of more than 25 percent.
“The key to lowering cable costs is competition,” Seidenberg said.
Co-sponsor of the Video Choice Act and committee member Sen. Jay Rockefeller (D-W.Va.) acknowledged that local governments may be concerned about losing revenue that local franchise fees provide. Rockefeller maintained, however, that the act would ensure that the social policy obligations met by cable television operators would be enforced if national competitors moved into the market.
But not everyone at the hearing was satisfied with this point of view.
Tom Rutledge, the chief operating officer of Bethpage-based Cablevision Systems Corp., told the committee that discarding the existing franchise framework at the request of the telecommunication giants is unnecessary and will weaken the ability to reflect local interests.
“The truth is, local franchising works,” he said. “It has proven to be a durable, stable and effective means of respecting local interests, encouraging massive investments and accommodating entry.”
Committee Chairman Sen. Ted Stevens (R-Alaska) said he feels confident that a bill taking into account the position of local governments while also spurring competition can be passed by the end of the year.