Verizon Sues County for Cable Franchise Process

Verizon Communications has filed a lawsuit against Montgomery County, Md., accusing the county government of making unreasonable demands in the telecom giant’s attempt to obtain a cable-television franchise.

Verizon, which has been rolling out its FiOS fiber-to-the-premises television product since September, argues that Montgomery County is asking the company to pay “hundreds of thousands of dollars” in fees the county owes to attorneys and consultants, in violation of federal laws.

The county is also asking for about 65 channels for public, educational and government programming, although it now has only 11 such channels, Verizon says in the lawsuit, filed last week in U.S. District Court for the District of Maryland in Greenbelt. And the county is asserting the authority to collect taxes on Internet service and to regulate the construction of Verizon’s fiber-optic network, in violation of federal law, Verizon said.

This is the first lawsuit Verizon has filed against a cable-franchising authority, said Verizon spokesman Harry Mitchell. The lawsuit comes as the U.S. Congress is moving forward on two versions of a wide-ranging communications bill that would streamline the cable franchising process, taking most of the authority away from local governments. On June 28, a day before Verizon filed the lawsuit, the Senate Commerce, Science and Transportation Committee voted to send its communications bill to the full Senate for a vote.

“It’s [a decision] we didn’t take lightly,” Mitchell said of the lawsuit. “We feel like we were in a box; we didn’t have any other choice.”

Montgomery County, bordering Washington, D.C., has had its cable franchising rules in place since 1982, and those rules comply with federal law, county Chief Administrative Officer Bruce Romer said in a statement. Since then, the county has granted cable franchises to two cable companies, and county officials are “committed to video competition,” he said.

As of last week, Verizon had not yet submitted a franchise application to the county, Romer added. “They are challenging a process which applies to their competitors but which they have not yet officially entered,” he said. “This lawsuit is evidence that Verizon is unwilling to play by the same rules that apply to their cable competitors.”

Montgomery County is the only place in the Washington, D.C., area where Verizon has been unable to obtain a video franchise, the company said. The cities of Laurel and Bowie, Md., as well as Howard County, have granted Verizon franchises, and two other Maryland counties are on track to grant the company video franchises within months, the company said in a press release. In northern Virginia, Verizon has obtained franchises from nine city or county governments and one military base, it said.

Montgomery County’s failure to grant a franchise is costing consumers there hundreds of thousands of dollars, Verizon added. Verizon’s standard FiOS TV package costs nearly US$30 less per month than a comparable cable package from its main video competitor in the area, Comcast, the company said.

-Grant Gross, IDG News Service (Washington Bureau)

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