STATEMENT BY THE HONORABLE PETER CANTU
MAYOR OF PLAINSBORO TOWNSHIP
CHAIRMAN OF THE LEAGUE’S TELECOMMUNICATION COMMITTEE
BEFORE THE BOARD OF PUBLIC UTILITIES COMMISSION
TUESDAY, NOVEMBER 21, 2006
CHERRY HILL, NEW JERSEY

Madame President and Members of the Commission,

I would like to thank you for letting me speak on the application made by Verizon Communications to obtain a statewide video franchise. My name is Peter Cantu and I am Mayor of Plainsboro, NJ. And today I speak in that capacity and on behalf of the New Jersey League of Municipalities, as Chair of the League’s Telecommunications Policy Committee.

This application by Verizon is an important milestone for our state. It is the first application for a statewide franchise that will allow a company to begin competing against local cable providers. I hope you act on the application fairly and expeditiously. This would send the right signal to other companies that may seek to serve consumers in New Jersey. We need more competition for video services and your actions on the application can help the cable subscribers and all the citizens of our Garden State.

On August 4, 2006, 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. For that reason, the League of Municipalities spent considerable time working with state legislators, opponents and proponents of the bill to ensure that the new legislation advanced the cable-related needs of the state’s municipalities. Verizon officials, throughout the process, always negotiated in good faith. And for that, as well as for their well-earned reputation for good corporate ‘citizenship,’ we thank them.

For a variety of reasons, including the fact that the new legislation promoted competition, increased the franchise fee to help bring property tax relief, and saved municipalities the time and expense of negotiating detailed franchise agreements with cable companies, the League supported the legislation.

The League’s support of the legislation was not without reservation, however.  The League was and remains concerned that the holder of a system-wide franchise not ignore municipalities that lack sufficient population density to make them immediately profitable for a cable provider to serve.  The League is also concerned that the holder or a system-wide franchise deal in good faith with municipalities to provide them with the same benefits that they would have received under the old Certificate of Approval process.  Additionally, municipalities should continue to have a say in the franchising process.

With all of this in mind, the League of Municipalities presents the following comments on Verizon’s November 2, 2006 application for a system-wide cable television franchise.

First, we note that the Board will be ruling on this application before it has adopted its newly-proposed regulations.  These regulations are supposed to incorporate the provisions of the new law and set the rules for making an application for a system-wide franchise.    Even though these regulations have not been adopted, we urge the Board to follow them as proposed, and to hold Verizon to the same standards it would if the regulations were in effect.

Second, build out of the system will always be a concern of League members. Put simply, the League of Municipalities urges the Board to require Verizon to build out its system as quickly as possible.  The application now before you states that Verizon’s “initial service area” will serve 316 municipalities.  This still leaves approximately 220 municipalities in New Jersey without the effective competition provided by this statewide franchise.  The Board should make it clear to Verizon that full build out is to be completed as quickly as possible.

Third, Verizon’s application is silent as to the franchise fee it will pay. Obviously, the new law requires the holder of a system-wide franchise to pay a franchise fee of three and one-half percent of gross revenues to the host municipality, as well as one-half of one percent of gross revenues to the State Pharmaceutical Assistance to the Aged and Disabled Program.  We assume that there is no dispute about this requirement.  It is of critical importance to municipalities.

Fourth, Exhibit H of the Verizon application discusses the equipment and training it will provide to municipalities.  Verizon plans to offer users access to free equipment and training through programs established at local colleges and universities.  The League has two concerns about this program.   Our first concern is that Verizon only has three initial locations for the equipment and training: Mercer County Community College, Bergen Community College and Brookdale Community College.  Clearly, there must be rapid deployment of other locations so that the equipment and training are readily available to residents in all of the municipalities that will be receiving Verizon’s service.  Our second concern is that the amount of equipment made available will not be sufficient to meet the local demands. The Verizon application says that there will only be one camera, one set of lights, one set of microphones, one editing machine, etc. at each site.  At most, there will be 25 sites (although only three to begin with).  This means that Verizon will be providing, at most, 25 sets of equipment for use by 316 municipalities.  This is not sufficient, and it does not appear to meet the requirements of the statute.  The statute required that an applicant for a system-wide franchise make a “commitment to provide equipment and training for access users, without charge, on a schedule to be agreed upon between the municipality and the CATV company.”  N.J.S.A. 48:5A-28(l).  In the past, cable companies have often provided free equipment directly to municipalities through their franchise agreements, and that seems to be what the new law also requires of Verizon.  Verizon’s plan sounds more like a library-loan program. We would rather see the equipment made available directly to the municipalities.  If the Board nevertheless approves the loan program, we would expect Verizon to have sufficient equipment available that municipalities could count on using the equipment when they need it, and not have to wait in line behind other municipal users.

Fifth, the Verizon application commits to providing two public, educational and governmental (PEG) channels for use by each municipality where cable service is being provided, and also commits to providing additional PEG channels if requested by a municipality and the municipality can demonstrate that its cable-related needs require additional channels. This commitment is important to municipalities.  More and more, municipalities throughout the state are taken advantage of municipal PEG stations. The timeframe for providing those access channels should be clearly set forth in any approval granted by the Board, and providing those stations should be a priority of Verizon.  Also, municipalities should be given the benefit of the doubt when requesting a third or even fourth station, and not be put through an extensive administrative process to prove their need for the extra stations.

Sixth, the Verizon application commits to providing free internet and basic cable service to municipal buildings. This benefits libraries, volunteer fire stations, police stations, etc.  It is valuable to the municipalities and should be prioritized by Verizon.

Finally, Verizon’s Exhibit J describes how it will provide service to multiple dwelling units. The League believes that it is critical that multiple dwelling units be served, and that they be served on a non-discriminatory basis. Verizon has made a commitment to dedicate a group of experienced engineers to solve the problems associated with wiring and providing service to multiple dwelling units.  We are pleased that Verizon will be dedicating significant resources to this issue, and urge the Board to hold Verizon to its commitment.

In conclusion, the League asks the Board to take a very close look at the Verizon

STATEMENT BY THE HONORABLE PETER CANTU MAYOR OF PLAINSBORO TOWNSHIP CHAIRMAN OF THE LEAGUE’S TELECOMMUNICATION COMMITTEE BEFORE THE BOARD OF PUBLIC UTILITIES COMMISSION TUESDAY, NOVEMBER 21, 2006 CHERRY HILL, NEW JERSEY Madame President and Members of the Commission, I would like to thank you for letting me speak on the application made by Verizon Communications to obtain a statewide video franchise. My name is Peter Cantu and I am Mayor of Plainsboro, NJ. And today I speak in that capacity and on behalf of the New Jersey League of Municipalities, as Chair of the League’s Telecommunications Policy Committee. This application by Verizon is an important milestone for our state. It is the first application for a statewide franchise that will allow a company to begin competing against local cable providers. I hope you act on the application fairly and expeditiously. This would send the right signal to other companies that may seek to serve consumers in New Jersey. We need more competition for video services and your actions on the application can help the cable subscribers and all the citizens of our Garden State. On August 4, 2006, 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. For that reason, the League of Municipalities spent considerable time working with state legislators, opponents and proponents of the bill to ensure that the new legislation advanced the cable-related needs of the state’s municipalities. Verizon officials, throughout the process, always negotiated in good faith. And for that, as well as for their well-earned reputation for good corporate ‘citizenship,’ we thank them. For a variety of reasons, including the fact that the new legislation promoted competition, increased the franchise fee to help bring property tax relief, and saved municipalities the time and expense of negotiating detailed franchise agreements with cable companies, the League supported the legislation. The League’s support of the legislation was not without reservation, however.  The League was and remains concerned that the holder of a system-wide franchise not ignore municipalities that lack sufficient population density to make them immediately profitable for a cable provider to serve.  The League is also concerned that the holder or a system-wide franchise deal in good faith with municipalities to provide them with the same benefits that they would have received under the old Certificate of Approval process.  Additionally, municipalities should continue to have a say in the franchising process. With all of this in mind, the League of Municipalities presents the following comments on Verizon’s November 2, 2006 application for a system-wide cable television franchise. First, we note that the Board will be ruling on this application before it has adopted its newly-proposed regulations.  These regulations are supposed to incorporate the provisions of the new law and set the rules for making an application for a system-wide franchise.    Even though these regulations have not been adopted, we urge the Board to follow them as proposed, and to hold Verizon to the same standards it would if the regulations were in effect. Second, build out of the system will always be a concern of League members. Put simply, the League of Municipalities urges the Board to require Verizon to build out its system as quickly as possible.  The application now before you states that Verizon’s “initial service area” will serve 316 municipalities.  This still leaves approximately 220 municipalities in New Jersey without the effective competition provided by this statewide franchise.  The Board should make it clear to Verizon that full build out is to be completed as quickly as possible. Third, Verizon’s application is silent as to the franchise fee it will pay. Obviously, the new law requires the holder of a system-wide franchise to pay a franchise fee of three and one-half percent of gross revenues to the host municipality, as well as one-half of one percent of gross revenues to the State Pharmaceutical Assistance to the Aged and Disabled Program.  We assume that there is no dispute about this requirement.  It is of critical importance to municipalities. Fourth, Exhibit H of the Verizon application discusses the equipment and training it will provide to municipalities.  Verizon plans to offer users access to free equipment and training through programs established at local colleges and universities.  The League has two concerns about this program.   Our first concern is that Verizon only has three initial locations for the equipment and training: Mercer County Community College, Bergen Community College and Brookdale Community College.  Clearly, there must be rapid deployment of other locations so that the equipment and training are readily available to residents in all of the municipalities that will be receiving Verizon’s service.  Our second concern is that the amount of equipment made available will not be sufficient to meet the local demands. The Verizon application says that there will only be one camera, one set of lights, one set of microphones, one editing machine, etc. at each site.  At most, there will be 25 sites (although only three to begin with).  This means that Verizon will be providing, at most, 25 sets of equipment for use by 316 municipalities.  This is not sufficient, and it does not appear to meet the requirements of the statute.  The statute required that an applicant for a system-wide franchise make a “commitment to provide equipment and training for access users, without charge, on a schedule to be agreed upon between the municipality and the CATV company.”  N.J.S.A. 48:5A-28(l).  In the past, cable companies have often provided free equipment directly to municipalities through their franchise agreements, and that seems to be what the new law also requires of Verizon.  Verizon’s plan sounds more like a library-loan program. We would rather see the equipment made available directly to the municipalities.  If the Board nevertheless approves the loan program, we would expect Verizon to have sufficient equipment available that municipalities could count on using the equipment when they need it, and not have to wait in line behind other municipal users. Fifth, the Verizon application commits to providing two public, educational and governmental (PEG) channels for use by each municipality where cable service is being provided, and also commits to providing additional PEG channels if requested by a municipality and the municipality can demonstrate that its cable-related needs require additional channels. This commitment is important to municipalities.  More and more, municipalities throughout the state are taken advantage of municipal PEG stations. The timeframe for providing those access channels should be clearly set forth in any approval granted by the Board, and providing those stations should be a priority of Verizon.  Also, municipalities should be given the benefit of the doubt when requesting a third or even fourth station, and not be put through an extensive administrative process to prove their need for the extra stations. Sixth, the Verizon application commits to providing free internet and basic cable service to municipal buildings. This benefits libraries, volunteer fire stations, police stations, etc.  It is valuable to the municipalities and should be prioritized by Verizon. Finally, Verizon’s Exhibit J describes how it will provide service to multiple dwelling units. The League believes that it is critical that multiple dwelling units be served, and that they be served on a non-discriminatory basis. Verizon has made a commitment to dedicate a group of experienced engineers to solve the problems associated with wiring and providing service to multiple dwelling units.  We are pleased that Verizon will be dedicating significant resources to this issue, and urge the Board to hold Verizon to its commitment. In conclusion, the League asks the Board to take a very close look at the Verizon application.  We support the benefits that competition can bring, but ask that the Board strictly construe the new law and the proposed regulations in favor of the municipalities of this state. Thank you.