Fact Sheets: Elements of Consumer Friendly State Franchising Legislation

Elements of Consumer Friendly State Franchising Legislation

Telecom companies want to weaken consumer protections

As Verizon begins competing in the cable marketplace with its new Fiber Optic Service (FiOS), the company has sought legislation in Pennsylvania that significantly weakens public interest protections for cable consumers without offering any meaningful competition. At its core, the proposal by Verizon takes away the rights of a local government to negotiate a video franchise agreement, replacing it with one state-wide franchise for all communities. The state-wide franchise allows Verizon to red-line communities by not building its network to serve them, threatens public, educational and government programming, and contains no rules to protect consumers in the event of service outages or billing disputes.

Local franchise agreements are not a barrier to competition

While Verizon argues the process of negotiating franchise agreements is the barrier to consumer choice, it simply does not appear to be the company's true experience. Verizon has already negotiated agreements with dozens of Pennsylvania municipalities, all before the company was prepared to even offer its FiOS service to a single consumer. Verizon CEO Ivan Seidenberg declared at a recent investor conference "We are only limited on this in terms of how quickly we can deploy the fiber," as reported in Broadcasting & Cable magazine. Verizon's complaint that franchise negotiations are too difficult is likely a strategy to avoid consumer protections and public interest standards that are gained from those negotiations.

The franchise process can be strengthened to benefit consumers

While the current franchise negotiation process is not broken, it is a system that was created when cable was primarily just for watching television. As the technologies have evolved and the state of our media landscape has been dramatically altered, it's never been a better time to use video franchises to improve the public's access to news, information, arts and culture. Thus, Verizon's entry into the video marketplace gives the public an opportunity to redefine our communications future through the video franchise process.

Key elements of strong cable franchising legislation:

• Maintain the control of local government authorities over rights of way, collection of franchise fees and enforcement of franchise agreements.

• Ensure that existing and future public, educational and government (PEG) stations are carried by video service providers and receive adequate funding to operate.

• Require that video service providers serve all consumers within their service territory over time. Reasonable exceptions for rural communities should be considered, provided that those consumers could be served by an alternative provider.

• Repeal any prohibition on municipal governments on creating their own communications networks, and provide financial assistance to deploy publicly-owned communications networks.

• Ensure that communications networks built with or supported by public dollars are open to any competitor at a fair rate.

• Require that any and all communications networks in Pennsylvania operate under the principle of network neutrality, whereby all content is treated equally and without discrimination.

• Require that video service providers maintain and upgrade their networks state wide, and do not abandon communities they currently serve.

• Protect consumers by prohibiting cancellation fees, ensuring available customer service representatives, setting standards for prompt resolution of billing disputes, and guaranteeing credit for service outages.

• Allow video service providers and municipalities the opportunity to negotiate additional provisions not included above, and allow negotiation to establish specific parameters for build out, rate of franchise fees, level of support for PEG stations, and other provisions.

For More Information Contact:

Beth McConnell: 215-732-3747, mcconnell@pennpirg.org

Joel Kelsey: 914-378-2351, jkelsey@consumer.org