Verizon, Cablevision Claim Victory After N.Y. Franchise Ruling

Jun 15, 2005  •  Post A Comment

Verizon Communications will be required to obtain franchise licenses in the New York municipalities where it plans to offer video service, but does not have obtain those licenses just because it is upgrading its plant to a level where it could offer video, the New York State Public Service Commission ruled Wednesday.

The ruling was in response to a request by Cablevision Systems and more than 100 municipalities in New York that the PSC require Verizon to obtain franchise licenses before it begins construction of a fiber-based network that could handle advanced services such as broadband and video.

Both Verizon and Cablevision used aspects of the ruling to claim victory. Cablevision pointed out that the PSC went on record as saying Verizon will have to obtain franchise licenses in order to offer video, while Verizon highlighted that the Cablevision request was denied.

A central element of the PSC case centered on whether Verizon’s replacement of its old copper-wire networks with fiber-optics would require that the company obtain approval from each municipality where the upgrades were being made before construction began.

Verizon argued that the plant upgrades are being made simply to enable the company to offer better voice and broadband services, and that the company never had plans to circumvent the franchise process when it came to offering video services.

“We have always said we will get franchise approval for video,” said Verizon spokesman Clifford Lee.

Indeed, Verizon has obtained franchise licenses in six communities throughout the United States so far, though none is in New York.

The issue of franchise fees for the telephone companies’ upcoming video offerings has become a hot topic in recent months, with two major phone companies taking a different approach to the issue. While Verizon has indicated it will seek franchise licenses in the communities where it will offer video services, SBC Communications is aggressively fighting any government mandate that it obtain franchise authorizations.

Cable operators have argued that not requiring the phone companies to seek franchises for their upcoming video services puts the phone companies at an unfair advantage to cable companies, which give the communities they service up to 5 percent of their revenues as a fee for doing business in those jurisdictions.

Local communities throughout the United States are becoming more vocal as well, arguing that they will lose out on valuable revenue if the phone companies bypass the franchise route.