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State Concerned that Verizon NJ Renewal Will Slow Fiber Deployments

Regulators wonder if company is willing to spend money needed to further extend its statewide franchise.

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Verizon New Jersey, a relative newcomer to delivering cable TV programming to customers, has racked up impressive numbers luring subscribers away from traditional providers since winning its statewide franchise in 2006.

So far, it has signed up more than 600,000 customers in about 352 municipalities in 19 counties around the state. In New Jersey, its investment in laying new fiber optic lines to deliver cable and Internet service and conventional copper-line capabilities has totaled more than $4 billion, according to company executives -- a big boost to the state’s economy. Its fiber optic system has bypassed more than 2.2 million New Jersey homes.

Still, some state regulators ask, "Is that all there is?"

The company, a wholly owned subsidiary of Verizon Communications, a telecom giant with annual revenues of $113 billion, is hoping to win renewal of its statewide cable franchise from the New Jersey Board of Public Utilities. The matter will be subject to public hearings before the agency early next month.

Verizon argues in its petition that it has achieved all of the requirements in the original approval by the BPU seven year ago, a stance not largely contested by state regulators.

The concerns arise due to fears among state officials that the company will stop deploying its fiber optic system in communities served by Verizon’s traditional landline service, which extends to a total of 526 municipalities in New Jersey. They worry rural communities and less densely populated municipalities will lose out on the opportunity to plug into Verizon’s network.

“I do think the franchise renewal is an opportunity to get some things done we want to see them doing,’’ said New Jersey’s Division of Rate Counsel Stefanie Brand, referring to the expansion of Verizon’s network of cable TV and Internet service. “They are saying they are not going to lay any more of their FIOS system,’’ she said, referring to the high-speed Internet and cable television service offered by the provider.

Ev Liebman, associate state director for advocacy, agreed. “We are very concerned Verizon appears to have stopped the build-out of its FIOS system. We don’t need pockets of the state with very little competition,’’ she said.

The issue is a concern because state officials hoped that awarding Verizon a statewide franchise, it would spur more competition in the cable TV sector, bringing prices down for consumers and businesses. With deregulation of the industry by Congress years ago, the BPU now only regulates a fraction of most cable TV bills, basically those providing only bare-bones TV programming.

When asked about that issue, Verizon did not answer the question directly.

“Right now, we’re still focused on meeting all the deployments in the 70 [required] towns under the original franchise order,’’ said Lee Gierczynski, a spokesman for Verizon New Jersey. “Once that’s done, we’ll see what makes sense in the future.’’

According to a BPU report completed this past May, the slowdown in deployments already appears to have already occurred.

“Data appears to indicate Verizon’s deployment has decreased dramatically in the last three years with only three towns added,’’ the report by the Office of Cable Television said. It also is within Verizon’s discretion as to when it will deploy FIOS service outside of its statutory commitments, the report noted.

Beyond its build-out plans, Verizon has come under criticism for frequently seeking waivers to avoid installing its FIOS service in multiple-dwelling units. It has filed 40 such waivers covering approximately 114 buildings, according to Brand.

Verizon negotiates in good faith with the owners of the so-called MDUs to obtain access to the units, Giercynski said. “If we are unable to gain access, we will file for waivers,’’ he said.

In addition, the company has come under fire from local officials and others for its decision to offer only cellular service in Mantoloking, instead of its traditional wire line and FIOS service, which were virtually destroyed by superstorm Sandy. The move riled local officials because it stood at variance with a decision to rebuild the systems on Fire Island in New York.

Giercynski said the move was based on the fact that Comcast offers a competitive alternative to consumers in Mantoloking, a position criticized by consumer advocates, including Brand.

“It’s a rebuilding infrastructure issue in Sandy-ravaged areas, Liebman said.

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