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December 22, 2009

Re: “Cable Television Act”

Dear Mayor:

It has now been more than three years since Governor Corzine signed P.L. 2006, Chapter 83, legislation that amended the State’s “Cable Television Act.”  Overall, the League believes that the new legislation has met its goals.  As part of the required review of the impact of the Act, we have sent the attached review to the Board of Public Utilities.

Very truly yours,

William G. Dressel, Jr.
Executive Director

                                                                        December 22, 2009


Ms. Jeanne Fox, President
State of New Jersey
Board of Public Utilities
2 Gateway Center
Newark, New Jersey 07102

RE:      In the Matter of the Board Proceedings to Examine the Effects of the Entry of
System-wide Franchisees into the State’s Cable Television Market Pursuant to N.J.S.A. 48:5A-25.2(d)
Docket No. CO09090757

Dear President Fox and Members of the Board:

On behalf of the New Jersey State League of Municipalities, I would like to thank you for the opportunity to submit comments in the above-referenced matter.  It has now been more than three years since Governor Corzine signed P.L. 2006, Chapter 83, legislation that amended the State’s “Cable Television Act.”  That legislation radically altered the municipal role in regulating cable television services.  At the time, the League of Municipalities spent considerable effort working with state legislators, opponents, and proponents of the bill to ensure that the new legislation would advance the cable-related needs of the State’s municipalities.  The League wanted to make sure that the new legislation would promote competition, increase the franchise fee to help bring property tax relief, save municipalities the time and expense of negotiating detailed franchise agreements, and contain guarantees that low income areas would not be passed over by companies operating under a new system-wide franchise.

Overall, the League believes that the new legislation has met its goals.  In particular, Verizon’s rapid entry into the market under the new franchising system has been faster than anticipated.  Verizon’s entry into the market has provided choice for residents in municipalities that in the past offered only one cable franchise alternative.

With the new competition, municipalities have seen an increase in franchise fees.  The new legislation required that the holder of a system-wide franchise pay 3½% of gross revenues to the municipality, which was a significant improvement over the former law, which only required a franchise fee of 2% of revenues on basic programming packages.  In addition, the bill required incumbent cable providers to pay the higher 3½%fee once the system-wide franchise holder was able to service 60% of the households in the municipality.  As a result, many municipalities are now seeing higher franchise fees being paid by the incumbent cable provider as well as by Verizon.

Municipalities remain concerned that their incumbent cable provider can walk away from an existing local franchise and automatically convert to a system-wide franchise.  We understand that this has happened twice -- in Fairlawn and in Cedar Grove.  We are pleased that incumbent cable providers have limited the number of times they have exercised this right, because municipalities that have engaged in the lengthy process of negotiating a franchise through the municipal consent procedures should be able to count on a cable company honoring the terms of that franchise.  Therefore, we continue to hope that cable companies utilize this procedure sparingly.  We would also request the BPU to carefully review any such action.

During Verizon’s build-out, there were initially complaints about Verizon’s inability to interconnect with the existing cable system, which limited Verizon’s ability to provide local cable programming on public, educational, and governmental (PEG) channels.  That process has proceeded much more smoothly since the BPU resolved the interconnection issue last year.  We would still like to see additional action by Verizon in providing training and equipment to municipalities for their PEG channels.

The League has not received complaints about discrimination in Verizon’s build out; however, the League is in many ways operating with incomplete information.  For that reason, we would urge Verizon to provide the mayor of each town in which it operates with a map of that town’s current build-out.  Having such information would allow each town to assess whether there is any evidence of “redlining.”

Overall, the new legislation has saved municipalities countless hours in negotiations with cable providers, and has thereby saved time and expense at a time when municipalities need to conserve resources to the greatest extent possible.

Finally, the League believes that Verizon has worked in good faith to implement its system-wide franchise.  Verizon has provided information to the League when requested, and has worked aggressively to provide service to our member municipalities.  The bottom line is that the new legislation has provided increased franchise fee revenues for municipalities and has provided more choices for municipal residents, which were both goals that the League sought when it originally supported the legislation.

Again, we thank you for the opportunity to submit these comments.

Very truly yours,

Hon. Brian C Wahler                                                    William G. Dressel, Jr.
Chairman, League of Municipalities                              Executive Director
Telecommunications Task Force and
Mayor, Piscataway Township


c:  Kristi Izzo, Board Secretary




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