Summer Vacation For Public Advice

An alert reader, noticing where we are in the month, asked me for an update from the MC Executive's citizen advisory committee - formally known as the Telecommunications Advisory Committee. The TAC meets on the third Wednesday of each month ... except:

1. There are no TAC meetings in the summer, and
   
2. 1. doesn't matter anyway but for different reasons then it thinks. (Hang in there. That sentence will make more sense soon.)

Summer TAC Meetings

At the last meeting, the TAC and the Cable Office agreed that nothing was happening that required TAC attention. (Rather ironic given the Verizon lawsuit announced just one week later.) But as long as I can remember, this peculiar practice occurs: The TAC is led by the Cable Office to believe that nothing is happening and TAC members happily concur that meetings will be poorly attended due to summer vacations anyway so by mutual agreement, the TAC schedules their next meeting 3 months hence - in September.

Yet every year, serious things churn throughout the summer. Last summer, the TAC recessed for the summer and only then did citizens find out about a hearing on Bill 7-05 (to extend the life of the Cable Compliance Commission) 5 days before the hearing. The year before, only in June did we see the final draft of the Executive's cable modem regulations (26-03AM) to be voted on by the Council before the next TAC meeting. And the summer of 2002, it was Bill 28-02 (which established the Cable Compliance Commission and led to the cable modem regs). Is citizen involvement really desired by the county - or does it simply want to pay lip service to the idea of citizen input?

And do TAC representatives really care about telecomm issues? Or are they just padding their resumes? It's a bad sign that the TAC representatives are all too happy to agree to take the summer off despite the history of what goes on around here. Good grief people! Is one night a month too much to ask?

Not That It Matters

Back to the question: Does the county want citizen input? An advisory committee? What for? A public hearing to consider the Verizon franchise? Why do we need to hear from the public? (Pop quiz for any MC officials: Over the last 10 years, which TAC recommendations has the Executive followed?)

Obviously, I have my doubts the Executive has spent a lot of time considering TAC testimony but at least the Executive has held public hearings for franchises. Alas, this seems to have stopped. The Executive didn't hold one for the RCN franchise renegotiation. And the Executive has not held one for Verizon. I recommend three public hearings:

1. One now - to let the public weigh in on the lawsuit.
   
2. One after the franchise application has been made available to the public for a suitable period of time - to give the Executive advice on the application.
   
3. And one more - to comment on the Executive's proposal during Council consideration.

By failing to even file the franchise, the Executive prevents the public from seeing any parts of Verizon's application and subsequent filings. (Yes, I know Verizon has not officially submitted an application but this now appears to be a technical issue rather than one of intent.) During Comcast's last franchise negotation, the county released close to 1000 pages of documentation - a treasure trove of material (some of it quite embarrassing and a good predictor of Comcast's future behavior) that helped citizens learn about the company.

Finally, each hearing must be effectively communicated to the public with sufficient lead time. The county has a history of announcing hearings without enough advance notice to give citizens (or the TAC) enough time to prepare statements. And such meetings must be communicated effectively to the public. Why is there no email list for such announcements? Even the Division of Solid Waste Services has an email alert list to let the public know when they're going to reschedule pickups! Can't we get this kind of timely and reliable email communication with other parts of the Executive branch? Or is it only for garbage?

And the Executive branch is not alone in its poor communication skills. The County Council home page has long advertised that citizens can sign up for council agendas and packets. And I have signed up - several times! But I've never received one. I finally called up this week and spoke to a council staffer who said that she wondered if any of the hundreds of people who had subscribed would ever complain. Evidentally, it was well-known internally that there was no automated mechanism to provide what the council has been advertising!

What's Happened Recently

On July 11, a closed-door session was held by the Council's MFP committee to discuss strategy over the Verizon lawsuit. The County is allowed to have closed-door sessions when getting advice from their lawyers. Yet it is my understanding no members of the TAC were invited to give their advice or otherwise participate. This is unfortunate as the advice from the lawyers is likely to simply re-affirm the interests of the county government - a self-reinforcing cycle of self-interest with resulting non-progress.

On July 20, the county filed its response. I've only just seen it myself; however a quick glance shows that it attempts to refute all of Verizon's assertions. By the way, the original Verizon filing was not searchable. I've made available a searchable version. (When you generate PDF, please make it searchable!)

In the meantime, I encourage you to read the discussion at dslreports.com. There has been some stimulating discussion of the lawsuit including comparisons with the franchises that Verizon has signed in neighboring jurisdictions and how these compare to the MC offers. One of the more surprising observations was the assertion that the Council advised the Executive that no cable-related legislation should be proposed before the next set of elections. If council members are too busy campaigning to do their job, I recommend they resign so that they can focus their attention on what is evidentally most important to them: their campaign.

More Notable Dates

On July 31 at 2pm, there will be the usual quarterly review of the franchisees: Comcast and RCN. Verizon is also invited pro forma. But based on the hyperbole being issued by both sides, I can't imagine how this will turn out. Bring popcorn. Settle back. No matter what, it should be entertaining. You can attend in person (7th floor of the County Council Building) or watch via County Cable Montgomery (channel 6) or streaming video - live or archived. Warning: the streaming video is very low resolution and the archive is usually not available for a day or two.

Although I've repeatedly said that Verizon has a significant advantage in the current situation, these MFP meetings generally keep the franchisees (and franchisee applicants) at a disadvantage. The councilmembers are in charge of the mike and can interrupt or cut off any speaker at whim. The council can bluster and posture and the other attendees have no recourse but to sit there and take it. Obsequiousness rules the day. Of course they can walk out or skip the meeting. That's been done, too, but I don't recommend it. Bottom line: Don't expect any kind of aggressiveness or legal maneuvering from Verizon here. This won't be the time for it.

On August 15 at 7pm, there will be a Candidate Forum for District 18 Legislators at the Kensington Town Hall (Armory Building). I bring this up because one of the candidates likely to participate is incumbent Delegate Jane Lawton who is also the Cable Administrator for Montgomery County.

Would this be the time to pose questions regarding the cable franchise? I don't recommend it. Jane is much too knowledgeable to be caught off-guard. She serves at the pleasure of Executive Duncan and she will faithfully represent his position, even if she personally doesn't agree. Nonetheless, it might still be worth watching her at the forum. She's very smart, experienced, and polished - plus, as an incumbent, she has a tremendous advantage over the other candidates.

Montgomery County Fights Back

In reaction to last Friday's lawsuit by Verizon, various MC politicians have declared that Verizon is the guilty party and that the county intends to vigorously defend itself. One such statement from a Gazette article:

"The county repeatedly expressed to Verizon and acted upon the county’s commitment to expedite the franchise agreement, but it takes two parties to negotiate," said Chief Administrative Officer Bruce F. Romer.

But it's clear that MC officials are in spin mode. Consider this comment from Councilmember Marilyn Praisner:

"They haven't submitted a franchise application," Praisner said, adding that when Verizon representatives appeared before her committee, she was told that the company would submit a franchise application, but so far that hasn't happened.

Praisner said that if Verizon didn't like the standard franchise agreement that other cable operators have signed, they could have red-lined the parts they didn't like, and submitted the changed version for negotiation, but she said the company hasn't done that, either.

But maybe it's not spin. Maybe the councilmember doesn't know the truth - that there have been extensive negotiations between Verizon and County Executive Doug Duncan.

Dear Councilmembers: MC and Verizon have been negotiating. Back in May of 2005, I reported that the county announced it had officially entered into negotiations with Verizon. Since then, the county has shared nothing publicly. Everything was secret - at least they tried to keep it secret. As an example, a few months ago, I reported some of the disagreements based on FCC filings. (See World's Apart.)

It's true that an application has not been filed but the reason why is not as simple as has been reported in the press. At a May 19 2005 hearing, the county specifically instructed Verizon not to file such an application until county officials had approved the principle terms. FCC filings confirm this. A history of the negotations can be found beginning on page 27 of Verizon's filing in the US District Court. (Thanks to JT, a Rockville citizen, for this link.)

At a February 2006 TAC meeting, the Advisory Committee was similarly informed that the Executive was unwilling to "file" the application - which would've resulted in sending it to the council for consideration, according to the Cable Office. (See 5th paragraph of Negotiations Going From None To Worse.) The filing step is indicated by the "Application Accepted for Filing" box in this flowchart.

Reading this narrative in Verizon's legal filing is almost as confusingly enjoyable as the Da Vinci Code. (I'm sure there's a dead body in here somewhere.) It recounts many meetings, discussions, proposals, and counter-proposals starting in May '05 to a final meeting in April '06 when the parties stopped communicating entirely. Ironically, while failing to cooperate with each other, both sides were sending filings to the FCC describing the inability to make progress. If you want justification for a national franchise bill, here it is. Montgomery County, Maryland: Poster child for the death of local franchising.

Specific Demands

By now you may have read some of the demands that Verizon is making and some of the demands that Verizon has claimed have been made by the county. I'm not going to go through all of these because it requires a better legal background than I have as well as knowledge that is currently buried only in the files of the two parties.

However, I will discuss a few examples to point out what I see as valid claims on both sides as well as misleading, incendiary, and in some cases, downright stupid language all around. (What's the legal term for stupid?) For example, Verizon claims that MC is asking for a franchise fee on all revenues. And the existing franchises do sound that way. They use phrases such as 5% of gross revenues without mentioning that certain things (e.g., internet service) are off the table. So Verizon could technically be correct that MC is "asking" for franchise fees on everything - but it's already settled law that Verizon doesn't have to pay such fees.

Some claims have more meat to them. For example, the claim that MC is requesting 65 PEG channels is based on MC's demand for 78Mhz (sufficient for 13 analog channels) worth of bandwidth. Verizon is restating this in the most damning way and without admitting that Comcast and RCN are already providing roughly the same thing already. It's particularly unfortunate because Verizon does have a good point that is obscured by its hyperbole - that using dedicated analog channels is archaic. Even worse, writing such language in the franchise is shortsighted. Even if Verizon decides to deliver PEGs that way today, it shouldn't have its hands tied tomorrow. Technology changes too rapidly. (Whether MC actually needs so many channels is a separate issue; Personally, I think it makes more sense to stream PEG programming on demand, perhaps via IPTV, and supply whatever connection or hardware is needed, gratis or at a nominal cost.)

This brings us to one of the biggest difficulties in the negotation - that Verizon is a different type of company with a different infrastructure than that of a traditional cable company. Whereas cable companies started with a cable system that has only recently incorporated other services, Verizon started with a telecomm system which only recently added "cable service" (video service would be a much better term, but that's history for you). And this colors the view of how much of the combined service can be regulated using traditional cable service regulation because local regulatory jurisdiction over a telecomm facility is allowed only "to the extent that such facility is used in the transmission of video programming directly to subscribers." (1984 Cable Act.) Must Verizon find that most of its traditional telephone service is now subject to regulation because it shares the same infrastructure as its cable service? How much is really shared? As a simple example, consider a customer who's cable service is improperly grounded - a safety issue that the county would normally investigate. Now consider his neighbor whose internet service is improperly grounded. The physical connections and risks are exactly the same and yet, the neighbor has no cable service. Does this mean Verizon isn't subject to the cable safety regulations?

In fact, this has been a dilemma for the county with Comcast as well. But it was easier to make the argument that all Comcast services were inherently cable-related at some level. Indeed, that's why Comcast claimed that the creation of MC's Cable Modem regulations would require no changes to their practices. Not only do they share the same plant, the same line technicians, but they share the same everything - all the way up to billing and marketing! With Verizon, this is not the case.

Needless to say, the county wants to treat Verizon exactly the same as Comcast and RCN with essentially the same franchise. Not surprisingly, Verizon won't swallow this. I'm sure the county recognizes this but yet is horrified with the idea of the alternatives:

• Alternative 1: Different franchises would likely encourage Comcast and RCN to sue for unequal treatment.
  
• Alternative 2: Renegotiating franchises with all 3 - Comcast, RCN, and Verizon - would be a nightmare.

The irony is that the county is absolutely right to require equal treatment. While I don't agree with all of MC's demands, there's little doubt that the differences between telecomms and cable companies are disappearing (or will as soon as the FCC lets them). In that sense, the county is doing the right thing. Alas, they're ahead of their time and thereby dooming us all to this massive quagmire in which we now find ourselves.

What to do? One way MC could resolve the situation would be to drop the demands that are objectionable to Verizon by also dropping them from the Comcast and RCN franchises. As an example, Comcast and RCN have lived with the customer service requirements on cable modems. But Verizon has objected to these same regulations. I used to feel strongly about the cable modem regulations but that was before Executive Duncan gutted them in 2003. What's left are either 1) superficial things like telephone answering time and 2) more essential things like "prompt service" requirements that, while valuable, might be sufficiently addressed by the reality of competition. Remember that the cable modem regulations were passed when Comcast was the de facto monopoly for most of MC. (Indeed, the low percentage of complaints in RCN areas are a good indication of the value of competition. Sadly, I predict that RCN will be a victim of Verizon's success.)

Oh, and the cable modem regulations include another class of items: 3) those that are knowingly ignored, such as county approval over the franchisee privacy polices and disclosure of all promos. Were I Verizon, I'd get the cable modem regulations thrown out on that basis alone. Wouldn't hurt to point out that that they're probably unenforceable anyway given their remarkably vague definitions. For instance, is it an interruption if I can surf the web but email is down? No one knows - the regulations never say what Cable Modem Service actually is!

Most recently, MC appears to have taken a different path, giving up the goal of franchise commonality and instead proposing different requirements. For example, one proposal by MC was for Verizon to provide 100 wireless hotspots around the county. (No mention was made how much it would cost residents to actually use the hotspots.) This was in lieu of traditional in-kind contributions afforded franchise authorities. However, the county doesn't need more of the traditional in-kind contributions, isn't entitled to them by law, nor is it entitled to demand different in-kind contributions - hotspots are simply not on the list of what a franchise authority is entitled to! MC also requested that Verizon cover attorney fees and other fees for handling and reviewing the franchise process - with no cap on those fees. The list of such demands goes on and it's pretty clear that these are excessive - a case of the county asking for something it has no right to except that it can because it has the final say on who gets an franchise.

Instead, what the county should be doing is cutting the demands for in-kind contributions from Comcast and RCN. Then, MC could fairly ask Verizon to shoulder the burden.

The Likely Future

If the case goes forward, I'll be amazed. On the one hand, I want it to go forward so that I can find out more details about what's been going on out of public view. (It drives me crazy when governments abuse their own processes to carry out decision-making in secret that was meant to be done in public view and with public participation. This alone is grounds for legal action.) On the other hand, I'd like this case to be settled so we can get the benefits of competition while avoiding the drawbacks of the pending national franchise bill. (Can't wait to start describing that!)

In the future, I'm confident that Verizon will get a franchise in Montgomery County. There is too much pressure for MC to resist. The citizens are very upset and rightfully so considering how much this is costing them - in legal fees as well as their monthly cable bills. And the lawsuit is a lose-lose suitation for MC. Even if MC wins, it loses. But it won't go that far. The telecomms are lobbying too heavily for the national franchise bill not to succeed before the lawsuit concludes. (On net neutrality alone, the telecomms have spent $9.1M to defeat it!) One way or the other, MC will get competition.

Verizon Files Suit Against Montgomery County

Today , Verizon sued Montgomery County, Maryland. I've never reprinted a press release before but this one speaks for itself:

June 29, 2006

Media contact:
Harry Mitchell, 304-344-7562

WASHINGTON - In an effort to bring video choice and competition to citizens of Montgomery County, Maryland, Verizon today filed a federal lawsuit against the county for its unreasonable and illegal cable-franchising process and demands.

The suit, filed in U.S. District Court for the District of Maryland in Greenbelt, asks the court to declare that Montgomery County's cable franchise process and requirements violate federal communications and antitrust law, as well as the First Amendment to the U.S. Constitution.

Verizon is asking the court for a preliminary injunction invalidating Montgomery County's current cable franchising law and directing the county to negotiate a franchise with Verizon on lawful terms within 60 days. At the same time - in an effort to help speed the negotiations to resolution - Verizon is asking the court to invalidate the numerous unlawful requirements the county is attempting to impose on the company.

"Verizon regrets having to take this step, but the county's unlawful demands leave us no other choice," said John P. Frantz, Verizon vice president and associate general counsel, who is leading the company's legal team on the case. "We would prefer to reach agreement on a franchise that would offer Montgomery County consumers more choice for their cable services, but after a year of essentially fruitless negotiations, we are at an impasse."

Montgomery County's Demands Hurt Consumers, Protect Incumbent

Over the year that Verizon has been negotiating to obtain a franchise to offer its FiOS TV in Montgomery County, county officials have made numerous unlawful demands that have stymied the negotiations. For example:

• The county asserts the right to collect fees on, and otherwise regulate, Verizon's telephone and broadband Internet service, in clear violation of federal law. In addition, the county claims authority to regulate the engineering, construction, placement and maintenance of Verizon's entire fiber-optic network once the company starts offering video service, again in clear violation of federal law.
• The county is demanding that Verizon set aside roughly 65 channels of digital capacity for public, educational and governmental programming, even though the county currently has programming for only 11 channels. Verizon wants to use the channels the county is insisting the company set aside to deliver programming that county residents want to see.
• The county is demanding that Verizon pay hundreds of thousands of dollars to cover the fees that the county owes to its own private consultants and attorneys; federal law forbids such demands.
• The county is demanding additional cash and free services as a condition for granting a franchise; it has no right to demand such terms under established federal law.

"We're frustrated at the lack of progress in these negotiations, because the inordinate delay benefits only the monopoly cable incumbent," said Frantz. "Meanwhile, Montgomery County residents continue to suffer, held hostage to Comcast's ever-rising cable rates."

Comcast has increased Montgomery County cable rates more than three times the inflation rate since 2000. In Montgomery County, the stalled franchise negotiations are costing county households more than $725,000 a month in possible savings.

"Competition will bring lower prices, more innovation and better quality," said Frantz. "It's past time for Montgomery County residents to join their neighbors in Howard County and Northern Virginia who are reaping the benefits of cable competition and choice."

Montgomery County is the only place in the Washington metropolitan area where Verizon has sought a franchise and has not been able to obtain one. In Maryland, Howard County, Bowie and Laurel have all granted Verizon a franchise; Anne Arundel County is poised to do so July 5; and Verizon's negotiations with Prince George's County are on track for an agreement by late summer. In northern Virginia, Verizon has obtained franchises from Arlington, Fairfax, Loudoun and Prince William counties; the City of Fairfax, Dumfries, Herndon, Falls Church and Leesburg; and the Marine Corps Base at Quantico.

Montgomery County Neighbors Enjoy Cable Choice, Competition

In other markets where Verizon has introduced FiOS TV - including neighboring Howard County - cable incumbents have responded with lower prices, more innovative bundled offerings of phone, broadband and video service, and increased broadband speeds.

Verizon's standard FiOS TV package, FiOS TV Premier, offers 180 digital video and music channels, two dozen high-definition channels and access to an extensive on-demand library for $39.95 a month. Comcast's most comparable cable package costs $68.60 in Montgomery County.

A family that switched to Verizon's video offering would save more than $300 a year and get more for its money. Verizon currently offers numerous other channels not provided by Comcast, including the Mid-Atlantic Sports Network, which broadcasts Washington Nationals baseball games.

The competitive response to Verizon's entry to the video market is swift and dramatic. In communities where Verizon already is offering FiOS TV, incumbents initially responded by slashing prices by 28-42 percent.

"Verizon's interest in this is simple," said Frantz. "We want the ability to bring choice and competition to Montgomery County consumers as quickly as possible, and we want Montgomery County officials to do the right thing by their constituents to make that happen."

More Detail

A summary document provides more detail about the basis for Verizon's lawsuit. Some of it sounds accurate and some of it doesn't but without the filings (not yet available), I can only speculate (and will do so as I find out more info). In the meantime, here is the summary document:

SUMMARY OF VERIZON’S COMPLAINT AGAINST MONTGOMERY COUNTY, MARYLAND
In May 2005, Verizon asked Montgomery County to grant a franchise to offer cable service in competition with Comcast. A full year later, the county has failed to approve Verizon’s application. Instead, county officials have responded by demanding that Verizon agree to a host of unlawful requirements as a condition for getting a franchise.

MONTGOMERY COUNTY’S ILLEGAL ACTIONS

Montgomery County’s Cable Franchising Process Violates the First Amendment.

• By adding cable television to its menu of communications services, Verizon seeks to engage in a form of speech protected by the First Amendment. Local laws licensing speakers must spell out narrow, objective standards that limit the discretion of government officials in deciding whether to grant franchises and what conditions may be attached.
• Montgomery’s County’s cable franchise process violates the First Amendment because it delegates to county officials discretion to approve or withhold franchises at will, to charge any fees they wish, to condition franchises on any demands they see fit, and to render decisions on any timeline they choose.
• The First Amendment requires that local authorities issue franchises in a timely manner. Yet county officials told Verizon it would take until at least November 2006 to grant a franchise, even if Verizon agreed to all the county’s illegal demands – a full 18 months after Verizon first asked for a franchise.

Montgomery County’s Franchise Demands Violate the Federal Communications Act.

• The Communications Act expressly prohibits local governments from exploiting their control over cable franchises to seize control over telephone and broadband Internet services. Yet county officials have, by ordinance and regulation, imposed a host of requirements on broadband and telephone services, as well as a series of rules governing the construction, operation and maintenance of Verizon’s telephone network, to which Verizon would be subject once it begins offering video service.
• The county has no justification for these requirements. Verizon is selling broadband and telephone services in Montgomery County today free from these regulations. There is nothing about Verizon’s offering video programming that suddenly creates a need to regulate its other services.
• Federal law limits the fees the county can collect to 5 percent of Verizon’s cable revenues. Montgomery County’s cable ordinance requires Verizon to pay 5 percent of its revenues on all services, including Internet service.
• In addition, to secure a franchise, the county has demanded that Verizon pay an additional 3 percent of its revenues to cover the county’s cable programs; provide free cable service to hundreds of government and private buildings around the county; pay hundreds of thousands of dollars to cover the county’s consultants’ and attorneys’ fees; and provide additional cash or free services on top of all these other concessions. Federal law prohibits all of these demands.
• The county’s contention that its actions are justified because it imposed the same requirements on Comcast is specious. Comcast’s franchise provides that if the county negotiates an agreement with a new entrant that requires smaller monetary contributions, Comcast can renegotiate its agreement to match those terms. This is not a question of competitive equity, but of county officials being unwilling to part with the perquisites offered by a cable monopolist.
• The county does not need the money. It is projecting a surplus of roughly $1 million for its cable fund in fiscal year 2007.

Montgomery County Is Enforcing Its Franchise Agreement With Comcast in a Way That Violates Federal Antitrust Law.

• Congress outlawed exclusive franchises in 1992. Prior to that, cable operators often offered perks over and above what the law required in order to win monopoly control of a market. The cable operator could then exploit its monopoly position to recoup the costs of these give-aways. Incumbent cable operators continue to employ this strategy to raise barriers to entry.
• The county has interpreted Comcast’s franchise agreement to block the county from offering a franchise agreement to a Verizon on different terms. This halts competition and protects Comcast’s monopoly. By entering into an agreement with Comcast that ensures the county will impose cost-prohibitive terms on new entrants, effectively blocking entry, the county has violated federal antitrust laws.

COMPETITION WILL BENEFIT MONTGOMERY COUNTY CONSUMERS

If allowed to compete in Montgomery County, Verizon’s FiOS TV will introduce much-needed competition and create significant benefits for cable customers.

The Lack of Cable Competition Is Harming Montgomery County Consumers.

• Control of the Market … Comcast currently controls the video market in Montgomery County. Roughly two-thirds of all households in the county, and roughly 75 percent of households that purchase cable or satellite service, subscribe to Comcast.
• Rising Prices … Because of a lack of competition, Comcast has been able to raise prices in Montgomery County by 25 percent since 2000 – nearly three times the rate of inflation. From 2004-2005, Comcast raised prices by 6 percent.
• No Competition … While satellite service is available, the FCC has determined that satellite is not effective at constraining price increases by cable companies.

Competition Can Constrain Comcast’s Price Increases.

• Competition Works … In its March 2006 report on video competition, the FCC found that in areas with real cable competition, monthly cable rates are 16 percent lower and customers pay 27 percent less per programming channel.
• Delay Costs Consumers … Nationwide, the delay in wireline competition is creating economic losses of between $8.2 billion and $21.4 billion per year.
• Montgomery County Consumers Are Paying a Huge Price … Thomas Hazlett, an economist at George Mason University who submitted a declaration in support of Verizon’s case, concluded that the county’s actions are costing residents more than $725,000 per month.

Verizon’s FiOS TV: A Much-Needed Competitor in Montgomery County.

Customers who switch to Verizon will save money. Verizon’s standard digital package costs $28.65 less than the comparable package offered by Comcast in Montgomery County. A family in Montgomery County that switches to Verizon could save more than $300 per year.

Even customers who don’t subscribe to FiOS TV will benefit from competition. In communities where Verizon has been allowed to compete, cable prices have dropped 28 to 42 percent.

• In Keller, Texas, the first location where FiOS TV began competing, Charter lowered its rate by $16 per month or 28 percent.
• In Herndon, Va., Cox dropped its price from $52.44 per month to $30 per month after FiOS TV entered the market.
• In Temple Terrace, Fla., Bright House lowered its price from $58.45 per month to $36.33 per month.

Verizon carries the Mid-Atlantic Sports Network, which broadcasts Washington Nationals baseball games. This is just one of the many channels Verizon carries that Comcast does not.

Anyone from the Montgomery County Executive's Office or Cable Office care to respond?

No Shows All Around

This week's Telecomm Advisory Committee meeting was lightly attended. The Verizon representative rumored to be there wasn't. A rep from RCN (aka StarPower) was officially given time on the agenda - and didn't show. And the two humiliated Comcast reps from last month didn't return.

And they might have been justified. Indeed, Jane Lawton was absent as well. As I understand it, she's officially back as the MC Cable Administrator but also still serving as a state delegate. The term was supposed to be over last month but the Governor wanted the entire Maryland General Assembly to stick around for awhile and try to address soaring energy rates. And her office reports that Jane will be running for her delegate position again. Since fall elections aren't that far away, it's only fair to wonder how much time she'll have to commit to cable issues during the campaign season.

One thing on Jane's mind is that her future may be more secure in Annapolis than in Montgomery County. Bills currently pending in Congress appear likely to strip away local cable regulation and pass it over to the FCC. Is that good? Well, it's good if you're concerned about obscene language. Regulating four-letter words on broadcast TV - the FCC has been good. But reining in soaring cable costs - not so good. And unless you can get a hundred thousand of your close friends to write to the FCC that your bill is wrong or your cable drop wasn't buried deep enough and was just cut by the landscapers, well, forget it.

The leading bill in Congress would nationalize the franchise system. The obvious benefit: Competition. According to Consumers Union, Americans who have a choice between two cable companies pay about 17% less on average. And cost is only one aspect that would likely improve. Being able to choose another provider (even if only one other choice) gives you a lot of power. All of a sudden, you're in control over who gets your hard-earned coin.

Is competition a total win? No. Although service may improve from competition, another concern is that the new bill contains no language forcing companies to provide service to everyone. If you live in a demographically-incorrect area, you may be out of luck. Well, you can move. Or band together with neighbors for community WiFi or community fiber. Hey, the local government may find a new role supporting these efforts! (Indeed, amendments to the bill support this idea.)

Sadly, the propaganda from both sides distorts the true advantages and disadvantages. For example, even traditional franchises have never provided guarantees of so-called universal coverage (a concept in and of itself of questionable merit). I take issue with claims of the Cable Office and its lobbying organization(s) as much as I take issue with the claims of the cables and the telecomms.

There are many other issues affected by these proposed bills (net neutrality being another world of distortion propaganda). I'm not going to get into them except to mention that the details in the bills are far from settled. It's been reported that there were over 200 amendments tacked on to the leading bill and god only knows what will happen once the bill goes into conference where legislators will add language never before seen by the public. From articles I've read in the Post, interested companies have sent hundreds of lobbyists to Capitol Hill and are spending millions of dollars per day pushing their interests on members of Congress.

Think Local

So what does this all mean locally? Well, the latest word from the Cable Office is that, once again, there has been no progress on a video franchise for Verizon in Montgomery County Maryland. Although no one is talking freely, it is apparent that nothing will happen locally until the bills in Congress either pass or die. And it seems pretty clear that the fighting will rage on for months. Bottom line: Unless MC and Verizon start talking, it will be at least a year before we see FIOS TV, even under a national franchise.

Curiously, the Cable Office had a meeting the following day (Thursday, June 22 '06) to which it invited the municipalities that MC normally represents in franchise negotations. According to the Cable Office, the meeting was to inform the municipalities of the status of the Verizon franchise. But why now - when there's been zero change in the status for months? Is it possible that some of the unhappy munis are negotiating with Verizon on the side, desparate to get around the county deadlock? If so, the county would surely like to squelch that before a domino effect completely undermines the county's position. Can any municipal representatives reading this offer their insights?

Vital This

As if to remind us that they are still a vital piece of the system, the Cable Office noted that:

• Comcast complaints were up last month, primarily regarding exposed drops.
• Comcast was out of compliance with respect to several different customer service measures and has thus been sent a warning as a prelude to a fine if they don't come back into compliance within the next quarter.
• RCN was late with franchise fees so they will now owe late fees. As I recall, the same thing happened last year. Is it serious cash-flow problems at RCN or just utter incompetence in their finance department? Too bad - because the county received only 3 billing complaints from RCN subscribers for the entire month of May. That's it. No customer service complaints, no installation complaints, no marketing complaints. That's a good record.

I shouldn't be too hard on the Cable Office. I appreciate the fine work they do - and yet I'm also frustrated at the limited reach they have given the fees they collect. (Did I mention that language in the national bill will ensure that locals continue to get their 5% franchise fee?) For example, the Cable Office is great at investigating safety issues such as ungrounded drops but the Cable Office can't touch frustrations like the incompetence of the phone reps at Comcast and the inability to be able to speak to a knowledgeable supervisor. (At last month's meeting, one TAC member speculated that Comcast doesn't actually have supervisors. It's just an empty title so that the front-line reps can say that "There are no supervisors around now, but I'll have one call you back." Has anyone been called back by a supervisor? Ever?)

And there's nothing that local regulators can do about prices in the upper tiers and the creative games that Comcast plays in making packages that include channels that no one wants. As an example of this nonsense, last month Comcast introduced a new package: The Family Tier, nominally for child-safe TV watching. Let's be honest - the only child-safe TV watching is no TV watching. The true reason for Comcast's new package was to head off Congressional interest in forcing a la carte subscriptions. A la carte would allow people to subscribe to just the channels they want. But this is the last thing that video providers want to provide. They figure that by offering a few more packages, they can claim that they are providing people with choice. And so far, Congress appears to have gone along with this charade. Have any customers swallowed this nonsense and signed up for this tier?

Triple Play Attraction/Repulsion

At dslreports.com, Karl Bode wrote about the Triple Play concept that I analyzed recently. As I said at the time, it's got some benefits but a whole lotta negatives. For example, in Comcast's case, the big negative is price. You ought to be getting a deal; in reality, the 'deal' is awful. And Karl notes that few customers are signing up for triple plays (and in some cases, quadruple plays). Here's Karl's take:

Karl Bode On The Triple Play

If you listened solely to ISP press releases, you'd think that the triple-play bundle is all the rage, and that the majority of customers are lining up to pay one company $100+ for three or more services. In reality, most customers still prefer to grab one or two services, and frequently can net better bargains by shopping around for their third or fourth service - be that video, wireless, or VoIP.

According to a Jupiter Research survey from March, only five percent of subscribers sign up for the triple-play, and only around a quarter of all customers are interested in nabbing all services from a single provider. "The assumption that everybody wants a bundle is flawed," a Jupiter analyst told the Washington Post last March.

This week a new study by Pyramid Research claims most customers are interested in either one or two services. The study finds that "most telcos are selling 1 to 1.5 revenue generating units (RGUs, aka one service) per customer while cable companies perform slightly better, selling around 1.5 to 1.9 RGUs per customer" (thanks to cable deploying VoIP faster than telcos are deploying video).

The report almost laughs at the idea of the "quadruple play."

Occasionally you'll catch rare candid admissions by incumbents that customers aren't quite as keen on the triple-play as their press releases would lead you to believe. For example, Time Warner's CFO recently admitted that only 7% of his company's customers subscribe to three services, and the majority only purchased a single service.

Whenever this topic is breached, there's a chicken and the egg debate here that springs up: are customers really saving significant money by bundling? Or are they being penalized for not bundling in environments where competitive choices are lacking? Comcast's stand-alone broadband service remains ridiculously expensive for someone who doesn't watch television. Similarly, stand-alone VOIP from Comcast costs a whopping $55.

Bundling is, in part, an effort by providers to obfuscate the real price of services, clouding the consumer's ability to directly compare single-service prices. Once a customer has switched to a single-provider, they're frequently greeted by unexpected fees, and the cost-savings they expected are nowhere to be found.

Upcoming Advisory Committee Meeting

The next CCAC (aka TAC or Telecommunications Advisory Committee) meeting is scheduled for June 21 at 7pm. The meeting will be held in Room 225 at 100 Maryland Ave., Rockville, and is rumored to include a Verizon representative. It would be nice if she were to address the status of the FIOS TV franchise but I don't expect it - all the negotations are being kept private - although snatches have escaped on occasion. At the same time, franchises are being hotly debated in Congress so a local franchise may be a moot point. Verizon may well have written off the MC franchise given its success to date lobbying Congress for national franchise legislation (it's already passed in the House).

If you'd like a question posed, send it directly to your CCAC representatives. You can check the Frapper map to find your nearest CCAC representative (look for the green icons). Most of them are publicly listed in the white pages. Call one up and express your thoughts. These people represent you!

The Best Deal For Comcast Customers

Computers are too damn complex. When my email stops working, I know how difficult it can be to narrow down the problem. Is it my broadband provider? My mail provider? My computer? My router? My toaster oven?

I have a more complex setup than most people - I use a 3rd party email provider. I accept the additional complexity of this but many people would not - they want the same provider for both email and broadband. They figure that broadband providers provide basic email service for free anyway. Plus, there's less fingerpointing when things break.

Wouldn't it be even better if we could simplify even further? Hey, broadband providers can! Internet service, video service, and phone service all from one company. One bill. One number to call for problems. Lately, I've been seeing the One Bill mantra played up more and more in advertisements. Not so much for the One Number For Problems though - I guess no one wants to focus on problems (especially when there are so many of them).

A Good Time Was Had By Almost All

I was reminded of the goal of simplification during the most recent meeting of the Montgomery County TAC (Telecommunications Advisory Committee) on May 18 2006. A good time was had by all. Well, all except the two Comcast representatives who gave a briefing to the committee. Admitting that things had not been going well in Montgomery County for some time, Angela Lee and Erin Pinkney attempted to put the right spin on it.

Angela, Comcast Senior Director of Government Affairs for MC and PG (and soon to include Frederick, thanks to the purchase of the Adelphia market but pending a lawsuit) described how complaints were now at a "very low level, lower probably than in years." Oooh, don't you just love unprovably vague assertions?!

Let's recast that in a different (but equally vague) way: Comcast's complaint levels have been so bad for so long, that anything has to be better. (See how this game is played?)

Attempting to shift the blame as much as possible, Angela noted that the number of problems (without giving an actual number, of course) due to Verizon construction was down significantly. (So Comcast replacing their area General Manager was just an everyday personnel change?)

Remind Me Why I'm Here

Erin Pinkney, Area Director of Marketing for Comcast, then had her turn. Apparently under a total misimpression as to her purpose for being at the meeting, she launched into a description of Comcast's latest products. Actually, a better phrase would be Comcast's latest marketing because that's all it was. Same products, different promos.

The committee politely listened to Erin go on about how customers want simplification (which she termed "lifestyle simplification" ) for about 15 minutes. Finally one committee member rudely interrupted and said: So my cable was cut for 3 weeks - no service - and only after I filed an official complaint with the county did I get a temporary drop. You promised me it would be replaced in 30 days but it's been 5 weeks - when are you going to fix it already?

At this point, the concept of simplification fell on the floor as committee members let loose with a barrage of questions and comments - paraphrased below. After each, I've shown Comcast's paraphrased response:

TAC: You're offering phone service? What are your reliability figures?
TAC: How can we be assured that your E911 is reliable?
TAC: I wouldn't trust my phone service to Comcast.
Erin: We have a new culture at Comcast!

TAC: How will you deal with phone outages? These are important!
TAC: How can I report outages if my Comcast phone is out?
Erin: Ask our Director of Technical Operations!

TAC: Why doesn't Comcast send out people who can fix the problem? I'm tired of getting people visit me who say "Oh, you need a line tech."
Erin: Miss Utility is causing severe delays!

TAC: Why can't we get Nats games?
Erin: We're negotiating!

TAC: Why is Comcast failing to provide us with FCC-required close-captioning statistics.
Erin: Write us a letter.
TAC: We did already!
Erin:

TAC: We're still seeing Verizon-related construction problems.
Angela: Yes, but less so.

TAC: Channels are disappearing from the analog band, will we get price reductions?
Erin: No, but we'll give you a free month of digital!

TAC: Why are additional digital boxes so expensive?
Erin: ... completely non-responsive ...

As you can tell from the last answer, I got tired of writing down questions followed by non-responsive answers. Indeed, the only reason I wrote down as many as I did is because they were, quite simply, outrageously entertaining in their non-responsiveness. Ok, the answer to the Nats question was responsive ... albeit useless.

To elaborate on a few:

Erin used the phrase new culture at Comcast several times in her answers. This came up yet again after one extended diatribe by a committee member who works for Geeks On Call. He frequently has to call Comcast on a customer's behalf - so he's got plenty of experience. He described typical interactions like this:

Comcast: Do you have your own router?
Customer: Yes.
Comcast: Then the problem must be in your router!

After describing how unhelpful the Comcast phone reps were, the same committee member asked directly: So what do you mean by "new culture at Comcast"?
Erin: I mean a new culture from a marketing perspective!

That certainly left everyone speechless! And in response to another question, Angela expanded: There is a focus on customer service! and she requested to Bear with us! Hmm, I've never seen that latter phrase in Comcast's advertisements!

Promos That Backfire

Speaking of ads, Angela and Erin went over a new promotion: the Comcast Triple Play. It works like this: If you don't already subscribe to all three of video, internet, and phone, you can do so at $33/month for each additional service for 12 months.

Who might find this attractive? I see the pricing targeted at 3 different groups:

1. Comcast TV and HSI (internet) customers who don't like the high price Comcast is asking for phone service.
   
2. Comcast TV customers who don't have Comcast HSI but are looking at (or already have) Verizon FIOS and traditional phone service.
   
3. Comcast HSI customers who already have satellite TV and traditional phone service.

In each case, there are substantial discounts to be had. For example in case 1, Comcast's deal is a 17% discount off their nominal cost of phone service. In case 2, Comcast is undercutting their own internet price by 23% as well as Verizon FIOS by 8%.

There are some differences in the internet service between Comcast and Verizon and I'm not going to go any further into that. And I'm not going to try to compare Comcast TV with the satellite equivalents - because they're harder to compare.

But it is easy to find a better price for phone service than Comcast's deal (which quite frankly is absurdly overpriced). Indeed, Verizon's VoiceWing (unlimited nationwide) package is $24.95. And there are even cheaper deals out there.

But if you want lifestyle simplification (to use Erin's phrase), Verizon should be considered. For example, say you're the typical long-term Comcast customer considering Comcast's offer for their Triple Play. So you have Comcast HSI+TV and are paying $96.60 (before taxes and fees). Add on Comcast phone for the special $33 and you're up to $129.60. But if you wanted to get the same three comparable services from Verizon, it would be Verizon-DirecTV ($44.99) + VoiceWing ($24.95) + FIOS ($34.95) for a total of $104.95. That's significantly lower. And the disparity is even greater if you're a Comcast Digital TV customer.

So if you're a new customer, the Comcast deal looks good - $99 for all three services. That's $5.95 less than Verizon. But Comcast's deal doesn't look too good if you're an existing Comcast customer. For substantial savings, you're far better off switching to Verizon. (Plus you get significantly higher upload speeds.)

Ironic, isn't it? If this new Comcast promo makes anything clear, it is that the best deal for Comcast customers is to leave Comcast.

Not Secret, Just Sad

Comcast

Since I wrote about Comcast's failure to make their rates public, Comcast has notified me that their rate page for Montgomery County has been restored and updated to reflect current rates. Here is the URL:

http://mywebpages.comcast.net/comcast_mo_co/Index.html/Products-1.htm.

However, I still see that the Comcast rate page does not include rates offered by Comcast marketing partners such as comcastoffers.com and comcastspecial.com. In my last discussion with Comcast Customer Advocate Gloria Looper, she maintained that such offers are not subject to the disclosure requirements of MC. I think she's wrong and I will file an official complaint with the county's Cable Compliance Commission if Comcast fails to correct the omission in 30 days.

Verizon

Since Verizon is not presently a franchisee in MC, Verizon is not subject to the disclosure requirements. Hopefully that will change in the future.

But even from a marketing point of view, Verizon's website could do a much better job with providing rate information. The current website is confusion city - a disaster of poor user interface design combined with a push for products and bundles that don't make sense in our area.

As an example, when I go to www.verizon.com, roll my mouse over the word Residential, and suppress the immediate urge to click (even though it's a link) and instead wait for and click the Products and Services link that appears, I get a page with a bunch of banner ads, the largest of which is for DSL - which I already know I cannot get. In that page, I find a text link for FiOS. Clicking on that, I get prompted for my Verizon home number or asked to go to yet another page to enter my address. Since I don't have a Verizon phone, I select qualify by address, enter my address, get yet another page to confirm my address, and finally:

Our records indicate there is existing phone service at this location. Please enter the Verizon home phone number associated with this address so we can show you the specific high speed options available.

Yes, there is existing phone service (1st sentence is correct) but it ain't Verizon - so the request (2nd sentence) is impossible for me to fulfill. Indeed, I haven't had Verizon service at my address for three years! I've had VoIP for a year and a half; Before that, I was totally cellular.

So I have no number to enter and there's no alternative button or link to click. Entering my (non-Verizon) VoIP number anyway just takes me back to the earlier screen that prompts me to enter my address. Entering it, I see that I have indeed fallen into a loop. Sigh.

This is just the tip of the iceberg. When I click on the Bundles link from the Products and Services page, I get sent to another page that talks about DSL and traditional phone service, not FiOS and not their VoIP product (VoiceWing).

And remember how I resisted the urge to click on the Residential link earlier? Well, if you're not so fortunate (and I suspect most people won't be), you'll simply move your mouse to the word and click on it. This is the way web pages are supposed to work. You won't see the categories until it's too late - instead you'll have already ignored -- Your one-stop source for everything you need to stay connected at home. -- which previously occupied that space.

Then you'll be sent to a page that says nothing at all about FiOS and VoiceWing; Once more, it's all DSL and more useless packages. Oh, but there is a link for Product Recommender. However that turns out to ask totally confusing questions ("How do you prefer to make most of your phone calls? Landline, VoIP, or WireLess? Huh??) I particularly enjoyed the question asking which features are most important to me with one of the choices being realiability!

Is it possible that Verizon is losing potential customers because their web pages are so bad?