Verizon Offers N.J. More Money for State Franchise

Jun 17, 2005  •  Post A Comment

Verizon Communications is telling New Jersey state lawmakers that it is willing to pay more in franchise fees to local jurisdictions if the state legislature can pass a bill that would require the company to obtain statewide approval for its forthcoming video service.

A Verizon spokesman said the company has had discussions with 110 of the state’s 120 legislatures and has told them the company is willing to pay 50 percent more in franchise fees to local municipalities in exchange for the state mandating that Verizon be required to only obtain statewide approval for its delivery of video services.

The sweetened offer comes after Verizon suffered setbacks in Texas and Virginia in its quest to be allowed to seek only statewide franchise authorization for its video product instead of being required to negotiate with every municipality in a particular state.

Virginia lawmakers rejected two bills that would have granted Verizon the ability to get statewide approval for its service, while in Texas, legislatures failed to act before the end of the most recent session, delaying until 2007 the next opportunity to revisit the issue.

The issue of franchise authorization is particularly important to Verizon as it looks to deploy its video service quickly. If Verizon is required to negotiate separately with each of the 526 localities it serves, it could significantly delay its ability to roll out the service, Wall Street analysts have noted.

However, incumbent cable operators are fighting the effort, claiming it would put them at a competitive disadvantage versus the telcos.

Verizon’s efforts are different from those of SBC Communications, which is also planning to offer a video service. SBC is lobbying state lawmakers to allow it to avoid the franchise authorization issue altogether, arguing that SBC’s video service is a vastly different model from that used by cable companies.

However, Verizon has made it clear that it has never intended to avoid obtaining franchise rights as part of its video service. Thus far, it has obtained franchises in six localities mainly in the south, and is gearing up in the next two weeks to begin negotiating franchise authorization for a number of jurisdictions in New York.