Verizon Joins Cable Fray in New York Suburbs

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The suburbs of New York City have become a battleground for competing cable companies. The giant telephone company Verizon is beginning to offer service there, opening up the market to competition for the first time.

RENEE MONTAGNE, host:

On Mondays our business report focuses on technology. Today, competition heats up in the cable industry. In most parts of the country if you want cable TV, you have no choice over your provider. That's beginning to change in some place--the suburbs of New York City for instance. There the giant telephone company Verizon is beginning to offer cable TV service, and that's opening up the market to competition for the first time. It's also led to a kind of bare-knuckles political fight with one of the other major cable companies. NPR's Jim Zarroli reports.

JIM ZARROLI reporting:

Jim Altadonna is the part-time mayor of Massapequa Park, Long Island, population, 17,000. He is not the kind of politician who would normally get caught up in a feud between telecommunications giants, but that's what happened this year and Altadonna doesn't much like it.

Mayor JIM ALTADONNA (Massapequa Park, Rhode Island): I don't understand why a billion-dollar company would attack a village mayor for trying to do right by its residents.

ZARROLI: Massapequa Park is one of dozens of small bedroom communities that grew up on Long Island South Shore after World War II. On a late afternoon in December, a few holiday shoppers make their way down Park Boulevard, the main shopping street, through the chilly darkness. There's a large lighted Christmas tree and a menorah on the square as well as a life-size singing Santa Claus on the sidewalk that waves stiffly at passersby.

(Soundbite of music)

Unidentified Singer: We wish you a merry Christmas. We wish you a merry Christmas. We wish you a merry Christmas and a happy New Year.

ZARROLI: The people here in Massapequa Park are known as big users of cable TV services. Households tend to spend a lot on premium channels and increasingly on DSL service. And for years, the only place to get cable was the Long Island-based company Cablevision. Residents like Tony Sclafani(ph), who stops in front a drugstore, have long bemoaned the lack of cable TV competition.

Mr. TONY SCLAFANI: Cablevision's been out here. It's been the only thing out here since I've been out here, which is 30 years. And if you don't like what they had or you don't like their prices, that's too bad.

ZARROLI: But this year that began to change. Verizon, the big local phone company that owns wires into everybody's home, announced it would begin offering cable TV service in the New York City suburbs. Verizon is one of the so-called Baby Bells, a rich company with plenty of resources to build its own cable network. And Mayor Altadonna says the village board was eager for Verizon to move in.

Mayor ALTADONNA: Everybody should have the choice, and I felt that, if I could bring a choice to our residents, they can benefit in maybe better pricing and better service and more services.

ZARROLI: In September, Massapequa Park became the first community in greater New York to approve a franchise agreement allowing Verizon to sell cable service. But what should have been good news for residents quickly turned sour. For one thing, a cable industry group with ties to Cablevision began distributing fliers and running newspaper ads complaining that Verizon had installed big ugly metal boxes on its telephone polls as part of the new cable network. The group also suggested that Mayor Altadonna and Verizon had misled residents about how far off the ground the boxes would go. In a close-knit village like Massapequa Park, the mayor says, the charges rankled.

Mayor ALTADONNA: I've had anonymous fliers before and it was always politically driven, and I really made it a point not to address it. However, this I felt was hurtful. They were questioning my integrity.

ZARROLI: Cablevision also filed suit against Verizon and the village board alleging that the board had met in secret to discuss the contract before awarding it to Verizon. Charlie Schueler is a Cablevision spokesman.

Mr. CHARLIE SCHUELER (Spokesman, Cablevision): In Massapequa Park, Verizon found a friendly mayor, and secret deliberations led to a special deal that hurts consumers.

ZARROLI: Cablevision critics say the suit and the fliers are simply an effort to fend off competition. Verizon spokesman Thomas Dunn(ph) says Cablevision is trying to send a message to other local communities that they'd better not let Verizon in.

Mr. THOMAS DUNN (Spokesman, Verizon): The lawsuit is an intimidation tactic. It's nothing more, nothing less. And, you know, we're dedicated. We will break up the cable monopolies and provide choice and competition to the people.

ZARROLI: And Verizon officials say Cablevision's tactics are a little ironic since Cablevision has been doing some expanding of its own. The company is now selling voice telephone services over its cable lines, directly encroaching on Verizon's market. But Cablevision says it's Verizon that wants to thwart competition by throwing its considerable weight around. Verizon angered some local officials on Long Island by installing its network without getting permission first. Anthony Panzarella, the mayor of the town of Malverne, has been a sharp critic of the company.

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Mayor ANTHONY PANZARELLA (Malverne): I think that was the wrong way for them to go. They should have approached the village first. Instead, they came in like a bunch of storm troopers and were trying to take over the village with all this wire and boxes.

ZARROLI: Panzarella acknowledges that Verizon has tried to make amends since then, and has been much better about consulting with local towns. But Verizon has since done something that angers local officials even more. It's lobbying for the right to sign cable contracts on a state or federal level. That means it would no longer have to negotiate individual agreements with every local community. And Panzarella says the change would strip town officials of any control over cable systems.

Mayor PANZARELLA: Right now, if I have a problem with Cablevision, for instance, I could pick up the phone and call the local government liaison and say, `Hey, Jack, you know, we're having a problem. We're getting complaints from our residents. Take care of it.' And usually within 24 hours the problem is taken care of. I'd like to see that happen if I had to call Washington.

ZARROLI: Cablevision's defenders also note that the cable company had to spend years painstakingly working out contracts with every local town it serves, and they say letting Verizon come in now and negotiate national contracts would give it an unfair advantage.

One thing that most people agree on is that the fliers and the lawsuit are unlikely to stop Verizon's entry into the cable market. Another suburb north of New York recently approved a contract with Verizon and the company is set to begin offering cable service next year. Even Verizon's critics say more competition is badly needed in the cable market, and if Verizon can make a go of it, few people really want to prevent it from doing so. Jim Zarroli, NPR News.

MONTAGNE: This is MORNING EDITION from NPR News. I'm Renee Montagne.

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