Monday, May 23, 2005

Verizon Begins Formal Franchise Negotiations in Montgomery County

On Wednesday, May 18 2005, I attended the monthly meeting of the MC CCAC, the County's Citizen Advisory committee on telecomm issues. The meeting was relatively brief (in topics, not time) since we had a guest speaker and that left little time for anything else.

Comcast Deals

Comcast is offering a nice discount for its existing HSI customers. 12 months at $29.95/month. For customers who only have internet service (like me), that's a discount of almost 50% off the regular price of $57.95 - wow! Clearly, this is in response to Verizon's presence in the county. Isn't competition grand?

So how will Verizon deal with this? I'll get to that later. First ...

Verizon Starts Franchise Negotiation

Finally, the county has announced it has officially entered into negotiations with Verizon for a cable TV franchise. This was long expected but it represents a milestone for several reasons. First, it means competition in yet another way with Comcast and Starpower. Second it means more regulation for Verizon, regulation in a way that they've never had before, albeit with a new profit potential. Third, it is an encouraging sign that Verizon's fiber is here to stay.

In some ways, Verizon has made a very low key entrance causing people to wonder if their fiber solution will be here for the long term. However, it's clearly the way to go. Unlike other technologies, fiber has no limit to speeds or customer reach and it will open themselves up to higher profits as they are able to sell "advanced" services with higher profit potential. Speaking of low key, the Washington Post ran an article on FIOS ("FiOS Speeds Up Web, Phone and TV Access", 5/8/05) describing "The company has been quietly rolling out the network since least year, with next to no advertising... Verizon spokesperson Sharon Cohen-Hagar said last week that the company has not been trumpeting the service much beyond the neighborhoods where it is available, in the hopes of managing customer expectations."

"next to no advertising" must mean something different to different people. I was in Montgomery Mall in Bethesda last week and found that many of the tables in the common dining area had been refaced with huge FIOS graphics. How could you miss that! And, at my home, I've received a flyer every week for the past four weeks telling me service was now available and I should call. Alas, I have called, most recently last week and it's always the same: No, you cannot get service. Sorry - we're not responsible for our marketing department. We can't tell them to stop sending you flyers, sir.

Let's be mindful that most of the complaints about Comcast are about customer service (most about billing). Most people would think it's technical issues but it isn't. So Verizon has got to get their act together with how they deal with the customer, otherwise people are just going to write them off as just another big company that doesn't give a damn. The reason so many people have turned to satellite isn't so much because of Comcast's video quality but because of Comcast's customer service and price. But if Verizon treats the customer properly, they can do well despite Comcast's price specials.

Personally, I'm looking forward to Verizon higher speeds, especially the upload speeds. And I'm hoping that the reliability is better. But I think the general population wants better customer service. And that includes accurate information. This current stuff is a terrible sign - having web pages that don't work reliably, having web pages that insist you enter a phone number and won't accept an address, operators not putting you on a callback list when marketing has already contacted you, operators not offering evening hours which is when many people first see the postcards and for some people is the only time they can call, and giving out contradictory info. The postcards say that you don't need POTS (Plain Old Telephone Service) but everyone I've spoken to who has successfully gotten service has POTS (or signed up for it to get FIOS), and Verizon is now saying that if you sign up with FIOS while having POTS, you can't drop the POTS. There also seems to be a question about retaining copper service if people are dissatisfied with FIOS. I know many people who don't want to give up their copper - at least initially - until they've been on the fiber for some time. But what Verizon appears to be saying is that once your phone is moved to fiber, it's never going back. Don't get me wrong - that doesn't bother me. But it does bother others - especially the older folks.

Verizon - hear this: You need to you get your customer service right. Otherwise, people won't see any reason to switch from Comcast even if they despise it already.

Franchise Negotiation

A few more comments about the franchise negotiation. Right now, the county lawyers are meeting with the Verizon lawyers. Verizon will probably ask to get parts of the franchise waived and the county will presumably refuse. This will drag on a while. Verizon also has to answer questions about their system and their finances. We'll likely see more jockeying over this - Comcast was outstanding at refusing to provide direct answers to questions about their finances - and this will further delay things.

Another kink is that no one (probably not even Verizon) is sure of what their video service will be. My understanding is that it will be quite unlike traditional cable and more like satellite - with the tuning done even further upstream - at a headend (meaning everyone will have to have a set-top box, sigh). So this opens up questions regarding basic service (the regulated tier) that we've never seen before and these questions need to be resolved.

The county has also learned its lesson with mistakes they made in previous franchises and may take this opportunity to correct these mistakes. The way this will work is that such improvements to the franchise will also have to be agreed by all the other franchisees. So this could delay things even more.

Further down the road, after the County Executive is satisfied, the Council will then hold hearings. (For reasons I've never understood, hearings by the Executive are optional.) And at that point, the public may weigh in and be ignored. Certainly, that was the case with the recent Comcast re-franchise. (People expressed excellent suggestions on how to improve the franchise but the Executive didn't take any of them.)

So how long is this going to take? Look for passage by the end of the year. Actual implementation is anyone's guess. I'm not aware of Verizon rolling out their video service anywhere at this point, even experimentally. Anyone know different?

Council Actions

The Council and Executive are having a terrible time trying to produce a budget. Part of this is driven by our exorbitant taxes and people finally complaining loudly enough for politicians to take notice. I don't claim to understand much of this but what I do understand is that the pols are playing lots of games with the money to make the numbers balance with the least amount of pain (or the most subterfuge). And by "least amount of pain", I mean for themselves. (Our taxes are still headed up.) Case in point: monies from cable franchise fees are not to be used for anything but cable-related projects in the county. However, "cable related" has become rather more loosely interpreted with each passing year. For example, this year the county has begun using cable funds for transcription services. The transcription services include closed captioning so I guess that the transcription was justified as cable-related on the basis that a small chunk of it was to be used on the PEG channels. Yet, traditional transcription service (the expensive part) doesn't go on any cable channel and has nothing to do with cable. Don't get me wrong - I think the transcription service is a great idea. But I don't think it should be paid out of cable fees.

A second type of subterfuge is the "borrowing" of franchise fees by the county for general appropriations. The county did this two years ago and is doing it again this year, this time to the tune of $500K. They are obligated to pay it back. Or are they? Like the Social Security lockbox, I doubt we will ever see that money again. At the same time, the money borrowed means that expenditures out of the cable fund will not occur. The 500K would have paid for fiber connections to the county's middle schools. So sorry, kids.

Somewhat off topic but still speaking of council actions, did anyone catch the Council's move to strip Executive Duncan of his power to distribute millions of dollars in grants to arts organizations? Duncan has reaped thousands of dollars in campaign contributions to the very same groups that he's been giving funding to! For example, Duncan's budget called for $500,000 in funding to the Baltimore Symphony Orchestra but according to the Washington Post, members of the BSO board have contributed at least $12,000! Clearly, the council didn't like this behavior so they have designated the county's Arts and Humanities Council, a private nonprofit, to allocate arts grants for the next fiscal year. (They also lowered Duncan's requested $6.9M budget for the arts to about $5M.)

Cable Office Notes

Jane Lawton, Cable Office Administrator for MC presented the latest statistics on complaints. In short, complaints about Comcast are up significantly - roughly 50% more complaints in April than in March. Jane was unclear as to what's going on - I got the impression it simply wasn't clear to the Cable Office but they are diligent watchers of Comcast and will report back in a month.

Jane also reported that inspectors went out to re-inspect problems that the County had previously warned about, that the problems still weren't corrected despite Comcast's assertions that they were. This has been a problem in past years and the county has actually fined Comcast over it. But it sounded like the County wasn't going to issue another fine just yet.

Jane mentioned her interest in the LA's new customer service bill of rights. This is something I've been meaning to look into myself. Marilyn Praisner has started the ball rolling to re-authorize the legislation for the Cable Compliance Commission so it makes sense that the Council will be able to take input based on LA's law in the re-authorization process.

Councilmember Marilyn Praisner

Councilmember Marilyn Praisner is an important ally in cable consumer protection and she paid the committee a visit during its meeting. In fact, she spoke for over an hour, talking about her ideas and encouraging the CCAC to continue its good work. As she observed, "Local governments don't have the time, budget and manpower to take on the industry. It is only with citizen help that we even stand a change."

She talked about an extremely broad span of topics, from Strathmore to RCN locking up more Nats games. But most of what she said was old news - I've mentioned it in various forms in this and previous blog entries - so I won't bore you with more of it. One new item though is that Marilyn is interested in VoIP and wants to have a forum, specifically on E911 issues. This is certainly a topic dear to me, as I recently tested my own VoIP-based E911. This topic is also timely because the FCC is also in the process of trying to come to terms with whether or not it should regulate E911. Alas, the Congress looks like it's going to force the issue down our throats, a position in which I'm not at all in agreement. Prepare yourself for new taxes!

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