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Verizon Wins Franchise in Major New York Market

4/07/2006 8:06 PM Eastern

Over the protests of Cablevision Systems Corp. and community groups backing the incumbent, Verizon Communications Inc. has obtained a franchise in the heart of the cable operator’s Long Island, N.Y., home base.

The town of Hempstead — about 20 miles east of New York City, with about 759,000 residents — approved April 4 a 10-year franchise for Verizon, becoming by far the largest U.S. community to open its door to the telco’s FiOS TV service.

The Hempstead agreement must be vetted and approved by state utility regulators, which could take two months.

Verizon earlier gained franchise agreements in Massapequa Park, also on Long Island, and in smaller suburbs South Nyack and Nyack in Rockland County, N.Y.

INTENSE BATTLE

As was the case in 17,000-resident Massapequa Park, the Hempstead franchise battle was intense, waged via commercials, mailers, town hall protests and newspaper editorials, and in heated debate during a public hearing.

TV ads placed by the Cable Television Association of New York stressed the view that Verizon intends to serve only the most affluent areas.

Local leaders and groups such as Circulo de la Hispanidad staged a protest at the town hall on March 25, claiming the Verizon build-out would bypass low income and minority communities. The protesters were supported by the cable-operator trade group and Cablevision, Verizon noted.

The franchise agreement says the telephone company does not have to serve areas where it is “economically unfeasible.” (That exemption typically protects a provider from demands that it serve a location far from its trunk; in Hempstead, Verizon is required to serve locations within 150 feet of its plant.)

REPEATED DENIALS

Verizon officials repeatedly asserted there would not be “redlining,” though, and said buildout plans call for plant to pass 87% of Hempstead town by the end of 2007, including a “significant” number of residences and businesses 12 months after franchise approval.

Verizon must also provide free connections to municipal buildings and schools, provide public, educational and government programming channel assignments and pay to support those channels. The franchise fee was set at 5% of revenue.

“Although we continue to believe this franchise will let Verizon pick and choose which residents receive its new service, this approval demonstrates that it is not hard for the phone company to get local franchises if it participates in the process,” Cablevision spokesman Jim Maiella said in a statement. “Verizon should stop trying to change state and federal law and instead work with local governments.”

 

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April