Verizon & Cable Board Agree on TV Franchise Terms

If Approved, Would Add Choice of Cable Providers

by Judy Silberstein

(October 25, 2007) The Larchmont-Mamaroneck Tri-Municipal Cable Board of Control shook hands with Verizon on Tuesday, October 23, informally concluding months of negotiations on a franchise agreement that will allow the company to provide its fiber optic television service to local subscribers. If approved by the three municipalities and the NY Public Services Commission, the contract will give Verizon a shot at snagging up to 37,000 potential subscribers, 12,000 of whom now get TV from Cablevision. Cablevision, if it is to continue providing service in this community, must also negotiate a new agreement to replace the one that expired in 2005.

“It’s been a long time coming,” said Mamaroneck Village Manager Lenny Verrastro, who is also the administrator for the Cable Board. “We’ve had a lot of residents asking when Verizon TV will be available in this area – they are anxious to see what the package and pricing will be.”

Mr. Verrastro said he was “very thankful that Jim Millstein stepped up” to chair the board. “Jim spearheaded the negotiations – he is an attorney by profession and was able to bring it to conclusion to the satisfaction of the Cable Board.” Tom Murphy, representing Mamaroneck Village, and David Fishman, for Mamaroneck Town, round out the board and voted along with Mr. Millstein in favor of the agreement with Verizon.

So What’s in it for Larchmont and Mamaroneck?

The community will get 5% of Verizon’s gross revenues from its local television service. “This is consistent with what we are currently getting from Cablevision,” reported Mr. Millstein. It’s also similar to agreements across the country.

In addition, Verizon will be paying substantial sums for public education and government grants – or PEG money – which is what supports LMC-TV’s capital needs. “I think we did well,” said Mr. Millstein, explaining how the grants will play out. There will be an initial grant of $445K, payable in four installments: $200K within 60 days of the contract’s inception; $95K on the first and second anniversaries; and $55K on the fourth anniversary.

In addition, Verizon will pay 75 cents per month per subscriber through the first ten years of the contract and $1 in year 11 through 15. There is one proviso: the monthly fee is 50 cents, the sum under the old Cablevision contract, until new terms are agreed upon with Cablevision.

On top of that, “We’re going to get competition – which should be a big plus,” said Mr. Millstein. “There should be competition on product, service and price.”

"The terms of the contract are much less rigid,” said Mr. Millstein, “on the theory validated by practice that competition will be an effective regulator of the conduct of the businesses.” Getting both sides to agree on the wording was not easy. “It’s a 40-page contract – it took a lot of time to work our way from the old regulatory regime to the new competitive regime,” he said.

[Click here to read the: Cable Franchise Agreement With Verizon.]

Verizon spokeperson Heather Wilner declined to comment on the agreement that has yet to be approved, but she did say, “We’re very excited to bring choice and competition to the community.”

How Does This Impact LMC-TV?

LMC-TV’s programming would appear on both Cablevision and Verizon’s FiOS TV. And all of the franchise fee will go to LMC-TV, as has been the case under the old Cablevision’s contract.

“This is unique among communities,” said Mr. Millstein.” Elsewhere all or a portion of the franchise fees go into the municipal treasury. “The Cablevision folks will acknowledge that we have one of the strongest public television operations in the country,” he said, “This is, frankly, why they are investing in it.”

The LMC-TV Board will decide what to do with the PEG funds. Last year, they hired a consultant who produced what is known as the “Buske Report” that recommended, among other things, that LMC-TV increase its efficiency by consolidating operations in a central location. Currently the main studios are at Mamaroneck High School and the Emelin, while the executive offices and other equipment are at the Mamaroneck Town Center. The PEG funds would provide the wherewithal, should the board chose, to implement the consultant’s suggestions.

The Public Weighs In

Before the contract can be approved, the public will have an opportunity for comment in hearings before all three municipal boards. Hearing dates are:

• November  7, Town of Mamaroneck
• November 13, Village of Mamaroneck
• November 14, Village of Larchmont.

If all goes well, the contract then goes before the NY Public Service Commission in Albany on December 12. That will allow Verizon to start offering FiOS TV as early as January.

Already, Verizon has installed the necessary fiber optic wires in 77% of the community. What’s left are mostly apartment buildings and condominium developments that require separate agreements.

Then Comes Cablevision

The Cable Board last met with Cablevision in the spring. “We’ve been asking them for a proposal for a year and a half,” said Mr. Millstein. “And now that they know that we’re moving forward with Verizon, they purport to be prepared to give us a proposal before our public hearings,” he added.

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