Verizon gets cable deal in Balto. Co.

Further approvals needed

company to battle Comcast

May 03, 2006|By JOSH MITCHELL | JOSH MITCHELL,SUN REPORTER

Intensifying the competition between two media giants, Verizon Communications has struck a deal that positions the company to go head-to-head with Comcast Corp. to provide cable television in Baltimore County.

The agreement between Verizon and Baltimore County government, confirmed yesterday by both parties, comes as Verizon is negotiating for the right to provide cable television in Anne Arundel, Prince George's and Montgomery counties, and less than two months after it began to offer the service in Howard County.

Verizon's move into video services follows Comcast's push into the Maryland telephone market late last year.

Consumer advocates welcomed the agreement, saying yesterday that it was likely to bring lower cable prices.

"Where there is competition, the consumer is better served," said Cheryl Reed, a spokeswoman for Consumers for Cable Choice, an organization supported partly by telecommunications companies, including Verizon.

FOR THE RECORD - An article in yesterday's editions incorrectly stated how soon Verizon Communications could begin construction on a fiber-optic network in Baltimore County if the County Council approves a deal between the company and the government. According to a Verizon official, construction could begin within two months of approval by the council.
The Sun regrets the errors.

Donora L. Dingman, Verizon's assistant vice president for external affairs, said Verizon "is bringing choice to Baltimore County."

"What we see is, time and time again, when there is a competitor offering all the services, customers really like having the option and that prices ultimately come down," she said.

The deal, completed recently after nearly a year of on-and-off negotiations, allows Verizon to replace its copper telephone wires with fiber-optic cable on public land throughout Maryland's third-largest county. The agreement must be approved by the County Council, which has scheduled a May 15 vote.

Verizon would still need to sign a cable franchise agreement with the council to enter the television market in the county.

Verizon has begun laying fiber-optic cable in Anne Arundel, Prince George's, and Montgomery counties.

Dingman declined to say how many Howard County residents have signed on with Verizon, but said "sales are going extremely well."

A spokesman for Comcast, which began offering voice services in Baltimore and Howard counties last year, said he did not know if the company had lost cable customers in Howard since Verizon entered the market.

"Comcast competes every day for every customer," said spokesman Jim Gordon. "Simply put, Verizon's trying to catch up."

Negotiations between Baltimore County and Verizon began last summer, but the sides butted heads on the fees associated with installing cable on county land. Dingman said in February that the county initially wanted to charge "cost-prohibitive" fees.

Under the deal, Verizon will pay the Baltimore County government $2.47 million for the right to install 13 million linear feet of fiber-optic cable throughout the county. If the County Council approves the deal, the company could begin construction within two weeks, Dingman said.

She did not give a timetable for Verizon to start offering cable, but said the company was able to reach a franchise deal in Howard County within four months.

Verizon's fiber-optic network is designed to allow it to deliver a package of phone service, Internet and cable TV.

The New York-based company reported yesterday a 7.1 percent drop in first-quarter earnings, in part because of costs to expand its fiber-optic lines.

Two Baltimore County Council members said they want to ensure that Verizon offers cable television service countywide, and not just in urban areas.

"If they're just targeting dense markets where you have higher incomes, then that doesn't serve the people of Baltimore County very well," said Councilman Vincent J. Gardina, a Towson-Perry Hall Democrat.

Asked if the company would offer cable TV countywide, Dingman said, "Eventually, we would." She said details on where Verizon would be required to provide service would be worked out in a franchise agreement.

Joe Hart, 48, a defense contractor from Fullerton, said he'd welcome another cable company in Baltimore County.

"It's a monopoly right now," said Hart, who pays $70 a month for digital cable.

Councilman Kevin Kamenetz, who negotiates franchises on behalf of the council, said that in meetings with Verizon and letters to the company, he has invited them to negotiate a franchise agreement, but that company officials have not responded.

Dingman said it would have made no sense to begin negotiating a franchise agreement without having in place an agreement that allows the company to build a fiber-optic network.

"We've bargained very hard with Comcast, and we're going to negotiate the same way with Verizon, because that's what is in the best interest of the taxpayers," said Kamenetz, a Pikesville-Ruxton Democrat. "We certainly welcome Verizon's entry into Baltimore County.

"Clearly, we are a county that has good economic demographics that would be favorable to their entry and to the cable business," he added. "And Comcast has already started providing telephone service. So let the battle begin."

The notion that competition leads to lower cable prices is confirmed by federal research. The General Accounting Office, the investigative arm of Congress, found in a 2004 study that markets with competition have prices up to 15 percent lower that in areas where one company provides cable service.

Councilman Joseph Bartenfelder, a Fullerton Democrat, said the agreement between Verizon and the county is good news.

"For every user in the county, I think it's a pretty significant day because ... it should provide them with more competitive rates," he said.

josh.mitchell@baltsun.com

Sun reporter Laura Barnhardt and the Associated Press contributed to this article.

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