Thursday, March 16, 2006

Let's Just Say Things Are Moving

At the MC cable advisory meeting last night (March 15 '06), Acting Cable Administrator Amy Wilson said that negotiations with Verizon are proceeding slowly - which is a euphemism for "We're now so publicly embarrassed by what's going on, let's just say things are moving."

Amy later clarified that Verizon had transferred negotiating authority from their lawyers in Chicago to lawyers here in Maryland with the aside that it's been troublesome working with people in a different state. I don't understand - is dialing a different area code all that difficult? She added that MC Executive Duncan has a meeting scheduled with Verizon's Maryland team at some unknown date in the future. A Ouija board would've been less vague.

All of her "details" didn't add up to much. They imply nothing new as far as I can tell. But since that's what she said, that's what I'm obliged to say she said.

Do writing complaints to the Cable Office help? Amy noted that the Cable Office had received many complaints about the Verizon franchise - or lack thereof. (The only other big issue generating a large number of complaints was about Comcast not offering Nats games :-P) And not only are complaints piling up in her office, Duncan's office, and the Council's office, but they are making their way to the FCC. Indeed, Amy said that she is scheduled to give testimony before the FCC on why Montgomery County has become the poster child for why local politics + local franchises = disaster. She said it was her intent to tell the FCC that it was all Verizon's fault, not MC's. Given all the franchises Verizon has signed at a rapid clip (another one signed in PA earlier this week), I doubt the FCC will put much stock in her claim.

State Franchise in Maryland

So what's the possibility of bypassing the Montgomery County government and having a Verizon franchise approved by the state? State franchises have been signed in a number of states including, most recently, Virginia. But the state franchises are quite different than the local franchises. The Virginia agreement (draft) isn't a franchise in the traditional sense. Rather, the Cable Competition Act signed last week, allows companies to go around local franchise authorities that don't respond to offers within 45 days. The result allows a video franchise to be received just 30 days after that. This is shorter than the time it takes to get a video franchise via the local authority so this new law clearly undercuts the power of the local authority to make significant demands that they have traditionally made.

The Virginia law allows local government to require 80% coverage but only at a later time. For the first seven years, only 65% of a locality need receive coverage. Is this an issue? Yes - it begs for leaving large areas unconnected and at the company's discretion. They can hit the high-profit areas for 7 years and then cash out if things aren't going well - or jack up the rates if necessary.

But what about competition? Studies show that competition results in lower rates. According to Consumers Union, Americans who have a choice between two cable companies pay about 17% less on average. So areas like MC that effectively have cable everywhere already (well, almost everywhere) should be helped even by a (less-regulated) statewide franchise.

So what are the odds of something similar in Maryland? At the present time, the odds are very low. Like 0% low.

Why No Interest In Maryland?

For starters, the MD state legislature has not been lobbied by anyone for this, well, anyone but Verizon - the obvious beneficiary. Our own Jane Lawton, Cable Administrator for Montgomery County is currently serving as a state delegate so that's one more roadblock - she would surely fight persuasively against the transfer of her local power to the state.

On the other side of the coin is Comcast, which has its hooks deep into Maryland politics. The Washington Post has given extensive coverage to the connections over the last two weeks. The long and short is that Comcast not only has lobbyists plying the halls of Annapolis and Washington DC but has also directly employed several key government employees and/or spouses and this appears to have affected the passage of legislation in Maryland.

I'm not going to go through all their observations but it makes for fascinating reading. Here are the Post articles:Bottom line: Expect no action at the state level. Montgomery County will continue on its own independent path for now.

Of course, that's not all bad. MC has a tough franchise and tough inspectors - and I like that. Indeed, new complaint figures suggest Comcast is improving. Last month, the Cable Office received 65 complaints about Comcast. This was the lowest number of complaints they've ever received! (Curiously, in that same timeframe, they received 7 complaints about Starpower, their highest number.)

But keep in mind what this costs you: a roughly 5% franchise fee amounting to $9 million countywide plus additional funds from various places bring the total cost to roughly $15.6M. Not to overwhelm you with too much detail, I'll mention just two items from that huge budget: $431K for legal fees (ouch!) and $189K to close caption CCM (the government PEG channel). These both sound like valid items but why are they so high?

Finally, I could be wrong about how beneficial a tough franchise is. After all, one theory is that this is the very reason why Verizon is so reluctant to sign a franchise in MC. And we've had this franchise for years and only recently has Comcast shown such low complaints numbers. Maybe it's the new leadership team at Comcast? Oh wait - could it be competition!?

The Brochure

Last week, I presented the Basic Rights for Cable Users brochure (discussion and brochure itself). To recap, the county has been most unhelpful and the committee seems to enjoy flogging themselves over the issue each month. Sure enough, they did it again last night. I guess no one on the committee reads this blog because they all sat there rehashing the same tired logic again and again. (How can we publish it despite the lawyers? Should we change it? And so on.) When someone asked for the nth time why it might cause the county to get sued, Amy made the incredible comment that no one knows because Comcast hasn't seen it yet.

News flash: Of course Comcast has seen the brochure. I guess it's been so long ago that Comcast used to attend the meetings that no one remembers - but Comcast reps sat through many of our discussions on it and received multiple drafts. I personally handed them drafts myself. We wanted input from Comcast. (We never got any but that's a different issue.) One more thing: Comcast officials read this blog - so even if all those earlier Comcast officials are long gone, the new ones know about the brochure anyway.

I'm sorry to say that the committee needs some straightening out and I'm not the one to do it. At the last meeting I raised my hand to make a correction and I was told by the Chair that "in the interest of keeping to the schedule" members of the public would no longer be allowed to voice comments or questions. They would have to wait until the end of the meeting during "Citizen Forum" time.

Huh? That would make sense if someone was raising a new issue but to defer a significant correction or question to later in the meeting? Huh?! Why does the committee want to continue a discussion using incorrect information? Or spend time re-discussing an item that was settled long ago?

This new practice is clearly a change from the past. When I served on the committee, if a member of the public raised their hand, we always recognized them and let them speak. (And there were more public attendees then than now.) If anything, the committee should be even more interested in opinions of the public because they've lost so many of their own voices. Earlier this year, the council changed the size of the committee, lowering it from 19 to 15. And with open seats, scheduling conflicts, and so on, attendance of a dozen is the norm. Is the goal of the committee to be more informed or less?


Anonymous said...

Came here when I was searching for info on fios tv in montgomery county. I had fios for about 4 months now and Verizon tv is really what I am waiting for. It really hurts when I hear these. Just curious, is it possible that Potomac offer Verizon a chance and bypass MCC?

JTRockville said...

I guess it's possible that Potomac could grant a franchise to Verizon. Gaithersburg, for example, has a separate franchise agreement with Comcast. I wouldn't say it's likely, though.

Does anyone know if the FCC hearings are open to the public?

Anonymous said...


Goor reporting. I am concerned that this is such a nightmare. Do Comcast's political connections filter down to the county level?


Anonymous said...

$431K in annual legal fees sounds excessive. Is there a breakdown of what makes it up? How does that compare with what other jurisdictions spend?

Don Libes said...

Potomac cannot make a deal with Verizon since Potomac doesn't have its own government. (There's no Potomac mayor or council so there's no one in any authority who could claim to represent the people of Potomac.)

Anonymous said...

Anonymous said...

Interesting document. I don't know what it shows about Verizon, but it sure shows Amy and Jane to have been far less than truthful with MC Citizens.