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Verizon Hedges Its Bets

Verizon’s push for video franchises took an interesting turn in the Washington/Baltimore suburb of Howard County, Md., where the company just struck a deal to deliver video service.

As part of that deal, Verizon negotiated a three-year “out” clause with the county.

“Verizon insisted on the ability to walk away from cable within three years,” says Howard County Cable Administrator Dean Smits.

According to more than one cable administrator, including Smits, Verizon has been pushing for that clause—and gotten it—in most of the franchises for its FiOS fiber-delivered video service.

Verizon spokesman Brian Blevins confirms that the clause has been included in all but its Fairfax, Va., and New York State franchises. In both cases, state laws prevent such clauses. Virginia, for one, has a “level playing field” law that prevents it from striking deals more favorable or less burdensome than those with incumbents Cox and Comcast, according to Cable Administrator Gail Condrick.

What is unique about the Howard County deal, says Smits, is that, if Verizon gets out of the business there, it must exit everywhere else in the state where it is delivering the service.

Given that Verizon is exploring the delivery of new services, company executives insisted on the flexibility to reevaluate the business after three years, says Smits. “We felt that was reasonable but wanted the statewide pullout caveat,” he adds.

The out clause is a major difference between Verizon’s deals and those of cable incumbents where it is seeking to overbuild. Howard County didn’t want the out clause in Verizon’s contract, preferring a commitment similar to Comcast’s 15-year deal, but it was “a deal-breaker” for Verizon, according to Smits. Besides, he says, “We don’t think they are entering the video business with the intent of getting out in three years.”

Says Verizon’s Blevins, “The provision in no way suggests a lack of commitment on Verizon’s part to offer consumers a long-term competitive choice. [As] a prudent business measure, we have sought to include this clause as a precaution in the extremely unlikely event that the services are not commercially successful in a particular market. A three-year time frame provides us a reasonable opportunity to assess our success.”

According to Smits, Verizon is in serious negotiations with Anne Arundel County, Md. (Annapolis), and has also had on-and-off talks with Montgomery County, Md.

Senate Schedules “Decent” Witnesses

The Senate Commerce Committee has set the witness list for its Jan. 19 “decency” hearing. (Senators don’t use the word “indecent” for their hearings).

The hearing will be divided into two panels, the first headlined by former Motion Picture Association of America President Jack Valenti, who has been charged by committee Chairman Ted Stevens (R-Alaska) with helping to come up with a new program-ratings system.

EchoStar Chairman/CEO Charlie Ergen and Comcast Executive VP David Cohen will also be featured on the first panel.

Four indecency-related bills are currently before the committee.

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