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Towns prepare for possible Verizon cable venture

Joe Napsha
| Thursday, May 5, 2005

Area municipalities are preparing for the phone company's expected entry into the cable television business in the not-too-distant future.

Even though Verizon has not officially announced plans for television service in any of 30 municipalities and two Pittsburgh neighborhoods where it is connecting homes to a new fiber-optic system, Sewickley is preparing for such an eventuality by hiring Pittsburgh attorney Daniel Cohen, an expert in telecommunications law, borough manager Kevin Flannery said Wednesday.

Cohen, head of the Cohen Telecommunications Law Group, will review Sewickley's existing cable television franchise agreement with Comcast Corp., and its compliance with that agreement, Flannery said. Sewickley notified Verizon it wants to meet with the company to discuss its future plans for offering video service, Flannery said.

Similar reviews with Cohen are ongoing in Hampton, said Christopher Lochner, township manager. "We've already told them (Verizon) that if they want to pursue video services, we reserve the right to discuss a franchise agreement," Lochner said.

Verizon has not contacted any municipality to begin negotiating a cable television franchise agreement, said Lee Gierczynski, a Verizon spokesman in Pittsburgh.

Federal communications law gives a municipality the right to franchise cable television providers, but not the right to sign an exclusive agreement, Cohen said. Municipalities can charge a maximum franchise fee of 5 percent of the gross revenue from the cable TV service, Cohen said.

Pittsburgh officials had "some preliminary discussions" with Verizon, which was told it had to provide cable television services to the entire city if it wants to enter Pittsburgh's cable TV market, said Rodney Akers, deputy director of the city's information system. Verizon crews have been installing the fiber-optic lines in Beechview and Brookline since this winter, he said.

"It can't cherrypick," selecting one neighborhood and skipping another, Akers said.

The city receives about $3.5 million annually from its cable TV agreement with Comcast, which pays 5 percent of gross revenue from its Pittsburgh video operations.

Comcast, which serves about 580,000 customers in 340 municipalities in Western Pennsylvania and the Upper Ohio Valley, said that municipalities where Verizon enters the cable television market should consider agreements that ensure "there is a level playing field" in terms of the franchise fee, said Brian Jeter, Comcast spokesman. The company pays a municipal franchise fee that ranges from 3 to 5 percent, Jeter said.

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