PPH Testimony on the proposed Verizon franchise

Written by Joshua Breitbart Wednesday, 25 March 2009 16:24

May 20, 2008

Testimony of Joshua Breibart, Policy Director of People’s Production House, before the Franchise and Concession Review Committee regarding the Cable Franchise Agreement by and between The City of New York and Verizon New York Inc.

Good afternoon. My name is Joshua Breitbart and I am the Policy Director of People's Production House. We teach public school students and immigrants to be journalists. We are currently conducting a participatory assessment of information and communications technology usage in New York City. I also contribute a monthly technology column to Gotham Gazette.

I appreciate the opportunity to address the Commission. However, I believe the requirements for public notice of this hearing have not been met, casting the legitimacy of this hearing in doubt. The public has not had an adequate chance to review and respond to the proposed franchise agreement. To ensure the legality of this franchise and out of respect for the public process, I urge you to delay review of this franchise for a minimum of 90 days.

Barring that, in the short time I have had to review the proposed franchise agreement, I have found several areas where I believe revisions are necessary to protect subscribers and potential subscribers.

Consumer Protection Standards

1) The proposed franchise would significantly reduce the established penalty for a cable company missing a scheduled installation or repair appointment window. Currently, the penalty for a missed appointment is free installation (for an installation call) and one month's credit based on the preceding month's bill. In Appendix A, this penalty is reduced to $25.

Here is the specific language for comparison. The current answer on the Department of Information Technology and Telecommunications (DoITT) website <http://www.nyc.gov/html/doitt/html/faq/faq_cable.shtml#15> to the frequently asked question, “Do I have recourse if the cable company fails to keep the appointment?” is

All companies are required to give credit for failure, without excuse, to arrive at subscriber premises within the appointment period as follows:

    * Installation: free installation and one month's credit based on cable services initially selected.
    * Service repair call: one month's credit based on preceding month's bill. In addition, all companies who fail, without excuse, to complete installation within the appointment period must give you free installation.

The new language in Appendix A, Section 10.1(iv) of the proposed franchise reads,

… The Franchisee shall provide to each affected Subscriber or potential Subscriber, as applicable, the following credits:… for a failure of a Verizon representative to arrive at the Subscriber’spremises within the appointment window period for repair service calls, a credit of $25 will be applied to the customer’s bill in the next available billing period. However, to the extent the Subscriber is not available when the crew arrives or if the crew does not have appropriate access to the Subscriber premises in order to address the service issue, this credit will not apply.

This is a huge concession that demands explanation, especially as it will presumably be replicated for other franchisees.

2) Penalties for poor customer service should be increased, not decreased. For example, the credit of 1/30 of a bill for outages [Section 10.1] should be tripled so it actually functions as a penalty, not simply a refund.

3) There are no penalties for failure to meet the customer standards laid out in the agreement. Section 3.4.3 merely says the Commissioner has the authority to order the Franchisee to take appropriate action to meet such standards. And the penalty for a pattern or excessive number of Significant Outages is having to submit a "Plan for Correction," and if the "Plan for Correction" isn't implemented, the penalty is to have to keep submitting it. [Section 6.6]

4) The franchise agreement should specifically prohibit early termination fees. The Daily News reported (April 25th 2008) that Verizon was planning to impose a cell phone-like penalty of $199 on subscribers who cancel service.

Non-English Procedures

If the parties have not been able to determine what percentage of Franchisee subscribers speaking a language other than English qualifies as “substantial,” [Appendix A, 3.2.4] such that Verizon would have to accommodate speakers of that language at its office, then DoITT should determine this percentage in consultation with the Franchisee before its first request for the “Franchisee’s Non-English Procedures”. [Appendix A, 1.2.2] This should be resolved before a conflict arises. In addition, “office” should be pluralized to “offices” in section 3.2.4.

Reporting and disclosure

Assuming the upgrade schedule represents a reasonable effort, there is no penalty to speak of for missing a Checkpoint. A $50 million Performance Bond [Section 15.9.2] (which will be cut to $35 million [Section 15.9.2.1] before the ink is dry) is inconsequential given the scope of the franchise.

Similarly, assuming the take-rate benchmarks for a Checkpoint Extension [Section 5.1.2] are reasonable, DoITT should announce to the public when the Franchisee has applied for a Checkpoint Extension and when the extension has been granted or rejected. People in the Bronx should know whether they will be waiting for 3 years or 6 to have a better than 50/50 chance of getting service. DoITT should maintain an up-to-date and publicly-accessible upgrade schedule.

Service to low-income residents

“Average” should be changed to “median” in Section 5.1.4 so that it reads, “… at each Checkpoint described above, the estimated median household income of all homes passed shall not be greater than the median household income of all households in New York City.” Comparing the median income of households passed to the average household income of New York City, as it currently does [Section 5.1.4] is a statistical sleight of hand that cuts the franchisee a significant amount of slack: The difference between New York’s median and mean household income in 2006 was $25,000. (See chart, below.)

Figure 1: Comparison of Median and Mean Household in New York City

IN 2006 INFLATION-ADJUSTED DOLLARS   
Source: 2006 American Community Survey, Data Profile   

Technology and Education Fund

Given the size and scope of our city and this deal, $4 million over 7 years is a meager sum for a Technology and Education Fund [Section 5.7]. If I had more time to review the matter, I would be able to recommend a specific, higher amount. Clearly, 8¢ per person per year is not enough.

Public, Educational, and Governmental channels

All Public, Educational, and Governmental channels should have the capacity for High Definition and Video-on-Demand. Anything else will turn these essential services into second class citizens. Going back to my original concern about the accessibility of this hearing: So many meetings and hearings are held during the day when most people are at work and cannot attend. City residents should be able to use VOD technology to take part in the political process by watching these events as their schedule permits.

In addition, you should remove the requirement that G/E channels have 80% original programming [Section 8.1.2.4] before acquiring its new channels according to the schedule in Appendix B. (I believe this restriction was already removed for the public access channels.)
 

Thank you for your consideration.