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Negotiations With Verizon

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					Negotiations With Verizon

     Trying to get to Yes!
•Please keep in mind that, while
“negotiating,” Verizon has been
lobbying on the national, state, and
local level from the beginning.
•Verizon has complained bitterly to
Congress, the FCC, DTE (cable div.),
state legislators, and citizens that towns
have dragged their feet and made
outrageous demands.
•Lakeville has NOT!
          What are our goals?
1. Competition between cable companies that
   results in lower prices/better service.
2. A fair deal.
3. A zero net loss in revenue, studio support,
   and capital funding, which we know will be
   necessary to fund upcoming Access
   Corporation.
  Why Does Lakeville Need $$ from
        Verizon/Comcast?
1. In January of 2011 our license with Comcast
   expires.
2. We know that all cable companies, including
   Comcast, are looking to eliminate their
   access studios.
3. We’ll need $ in order to fund our own
   Access Corporation in order to broadcast
   ANY town activities (e.g. Town Mtg.,
   BOS/BOH mtgs., Graduation, etc.)
  “Level Playing Field” Language
         Comcast License

(Sec. 2.3b, pg 10 of Comcast’s License): “The
grant of any additional cable television
license(s) shall not be on terms more
favorable or less burdensome than those
contained in this Renewal License. The grant
of any additional cable license(s) shall be at
the sole discretion of the Issuing Authority.”
  “Level Playing Field” Language
     Comcast License (cont.)
(Sec. 2.3bii, pg. 10 of Comcast License):
“Should the Licensee demonstrate that any
such additional cable television license(s) have
been granted on terms and conditions more
favorable or less burdensome than those
contained in this Renewal License, the Issuing
Authority shall consider and negotiate, in good
faith, equitable amendments to this Renewal
License.”
“Level Playing Field” language recognition
     by Verizon Proposal (9/27/06)

 (Page 2, para. 1) “WHEREAS, the Issuing
 Authority exercised diligent efforts to ensure
 the terms and conditions in this Final License
 are, in light of all relevant circumstances, not
 more favorable or less burdensome than those
 terms and conditions contained in the Cable
 Television Renewal License, dated January 29,
 2001, granted to…
“Level Playing Field” language recognition
   by Verizon Proposal (9/27/06) cont.

…MediaOne of Massachusetts, Inc., which is
 offering service as Comcast [______], and the
 Issuing Authority has made findings
 reasonable demonstrating such equivalency of
 overall benefits and burdens…NOW,
 THEREFORE,…THE SIGNATORIES…DO
 HEREBY AGREE…”
   Impact of Ignoring “Level Playing
           Field” Language

• Comcast will likely seek equity.

• Lakeville will lose money and studio support

• Lakeville will struggle to launch needed
  Access Corporation w/o enough money.
             Time Frame-1
1. April 2005—Original meet-and-greet
2. August 2005—Received Form 100 from
   Verizon.
3. November 2005—BOS responded with IAR
   (Issuing Authority Report).
4. December 2005—Received first original
   proposal from Verizon. Draft was NOT in
   format requested, barely understandable.
               Time Frame-2
5. LCAC studied 12/05 Verizon license
   proposal.
   a. Many conflicts/contradictions.
   b. Very difficult to understand.
6. 2/21/06—LCAC wrote to Verizon,
   requesting new, understandable draft.
7. NO RESPONSE UNTIL 7/20/06! (Keep in
   mind lobbying on all fronts by Verizon)
              Time Frame-3
8. 07/20/06—Received Verizon letter
    requesting resumption of negotiations, saying
    they were “eager” to sign a license w/ Lkvl.
    (Note proximity to DTE hearing of 8/16/06)
9. 08/04/06—First sit-down meeting w/
    Verizon—First real negotiations.
10. 8/29/06—Met w/ Verizon re: 31 open issues
    that LCAC can decipher.
               Time Frame-4
11. 9/13/06—Met w/ Verizon to discuss
    remaining open issues. Still have NOT
    received requested “understandable”
    proposal.
12. 9/27/06—Received “understandable”
    Verizon proposal. LCAC took under
    advisement/studied it further.
13. Lkvl’s atty. (P. Epstein) on vacation through
    much of October. LCAC continues study.
              Time Frame-5
14. Late October/early November, much
    discussion w/ P. Epstein and LCAC re: latest
    proposal.
15. Early November—discussions between P.
    Epstein and Verizon.
16. 12/13/06—conference call: LCAC, Verizon,
    P. Epstein—negotiations re: 20 open issues.
              Time Frame-6
17. 1/03/07—conference call—LCAC, Verizon,
    P. Epstein re: 19 issues.
18. January 2007 phone calls back and forth
    between LCAC, P. Epstein, and Verizon re
    confirmation of movement by
    Verizon/LCAC. Frequent requests by LCAC
    for Verizon confirmation of their positions
    during this time.
              Time Frame-7
19. 2/9/07—After multiple requests for Verizon
    positions, email from P. Epstein re latest V
    positions.
20. 2/21/07—Meeting w/ Verizon to clarify their
    positions.
21. 3/13/07—This meeting.
              Outstanding Issues-1
                Term of License
      Lakeville                         Verizon

1. Open to 15 yrs. subject to   1. 15 years
   other issues being
   resolved, but presently at
   10 yrs.
                                2. Request for Lkvl to make
2. LCAC will not get               written request for
   involved in                     “interconnection”
   “interconnection” issues        resolution between
   between Comcast and             Comcast and Verizon.
   Verizon.
               Outstanding Issues-2
              Gross Annual Revenues
3.      Lakeville                 3.      Verizon
     a. 10 yrs. @ 4.5% of              a. 15 yrs. @ 2.5%
        GAR plus fees or 15                 of GAR including fees
        yrs pro rata. (Includes            “until such time as
        value of present studio            Comcast renews its
        space.)                            license and provides
                                           different funding prior
     b. Needed $ for Access                to such renewal. In the
        Corp. when Comcast                 event of different
        License expires.                   funding, Verizon will
                                           match said funding.”
                                       b. 10 yr @$102,884, incl.
                                           Vid On Dem. $
         Outstanding Issues-3
     Gross Annual Revenues (cont.)
         Lakeville                    Verizon
3.(cont.) Gross Ann. Rev.   3.(cont.) Gross Ann. Rev.
   c. Includes $27k (1%),      c. Unwilling to pay
   $31693 (stu. budg.,         value of existing cust.
   $34963 (pres. office        serv. office. Will be
   costs.)=approx. 3.5%        paying cust. serv. $ in
   d. Value of present         other ways.
   studio space=??             d. Unwilling to pay
                               value of studio space.
            Outstanding Issues-4
             Capital Funding
4. Lakeville (10 yrs., but   4. Verizon (15 yrs.)
   open to 15)
                               a. 10 yrs @ $95k or
   a. $102,884 ($50k+             $142,000/15/yrs,
   $48k+$4884)/10 yrs.         (Had been $147,000 at
   b. If 15 years, then        8/4/06 meeting)
   Verizon should pay          b. 10 yrs @ $102,884,
   pro rata ($154,326)            incl. VOD $
              Outstanding Issues-5
              Inspection of Books

5.        Lakeville           5.    Verizon
     Sec 8.1—BOS has right      Verizon has not yet
     to inspect books “at a     agreed to confirm a
     location reasonably        location after saying at
     convenient to the          least 3 times that they’ll
     parties.” LCAC agreed      “look at it.”
     to Boston.               b. “mutually convenient
                                location but no farther
                                than Boston.”
             Outstanding Issues-6
             Liquidated Damages
6. Lakeville               6.      Verizon
(Cap or no cap?)                Verizon demands a
LCAC fought long and            $10,000 cap on all
hard because of trouble         damages. Reason:
w/ AT&T service in              “Corporate policy.”
2002. LCAC moved a great
deal on this issue, but    b. Agrees to $25K cap on
amount ($50k) was            Liquidated Damages.
unacceptable to Verizon.
• Comcast has no cap!
             Outstanding Issues-7
            Senior Citizen Discount
7.     Lakeville              7.      Verizon


•       LCAC feels that,      •    Verizon sees it as “a form
     since Comcast offers          of rate regulation” and
     one, Verizon should           refuses to sign a license
     also. (Level playing          with a senior citizen
                                   discount of any kind in it.
     field language)
                              •    Verizon refuses any
•    LCAC has tried to get         payout.
     $ payout in its place.
                              •    Will get back to us.
              Outstanding Issues-8
             Customer Service Office
8.       Lakeville          8.     Verizon
     Presently exists in        Will NOT consider such
     Comcast License.           an office until there is a
     LCAC wants from            “need” determined by
     Verizon at least the       Verizon. Will NOT pay
     $34963 Comcast             the money as part of the
     presently pays.            GAR.
                            b. Agree to build w/in 18 mos.
                                but no $ (1% GAR) if they
                                don’t build.
             Outstanding Issues-9
            Subscriber Complaints
    9. Lakeville              9. Verizon
                                “’resolve’ means that the
•   Present Verizon             Licensee shall perform
    language will NOT           those actions, which, in the
    guarantee resolution of     normal course of business,
                                are necessary to
    subscriber complaint.       investigate the
                                Subscriber’s Complaint
•   LCAC finds this             and advise the Subscriber
    totally unacceptable.       of the results of that
                                investigation.”
         Outstanding Issues-9 (cont.)
           Subscriber Complaints
• Comcast Language:          • Verizon language:

“Upon reasonable notice,     “resolve means that the
the Licensee shall           Licensee shall perform those
expeditiously investigate    actions, which, in the normal
and resolve all Complaints   course of business, are
regarding the quality of     necessary to investigate the
Service, equipment           Subscriber’s Complaint and
malfunctions, and similar    advise the Subscriber of the
matters.”                    results of that investigation.”
          Subscriber Complaints
               Solution??

• “’resolve’ means that the Licensee shall
  perform those actions, which, in the normal
  course of business, are reasonable to
  investigate and effect a reasonable (and
  timely—strike) solution to the Subscriber’s
  Complaint and to advise the Subscriber of said
  solution.”
           Verizon Lobbying-1
Nationally:

1. Congress—Force towns into 90 day decision.
   Congress turned it down.
2. FCC—Force towns into 90 day decision.
   FCC, in 3-2 vote, along party lines, approved
   it but, to date, has not published it so that it
   can be challenged.
          Verizon Lobbying-2
Nationally (cont.):

2. (cont.) There are serious questions about
  whether the FCC has the power to change
  legislation by their regulation. Presently being
  scrutinized by Congress and others. Very
  likely to be challenged.
          Verizon Lobbying-3
In Massachusetts:

3. Solicited DTE (cable division) to force 90 day
  decision by towns. Hearing on 8/16/06. Over
  30 municipalities, including Lakeville,
  testified. At present, no decision.
          Verizon Lobbying-4
In Massachusetts:

4. Verizon presently supporting a bill in the
   Statehouse that would force municipalities
   into a 90 day decision.

   At present…pending.
          Verizon Lobbying-5
In Lakeville:

5. Website used to encourage letter-
   writing/”complaining” to Town Hall.
6. Flyers mailed to encourage letter-writing.
7. Citizens calling Town Hall to report Verizon
   has told them that the town is to blame for
   there being no license/competition yet.
Question:
 What would have happened IF Verizon had
 made a “level” offer that matched Comcast’s
 license?

Answer:
 LCAC would have recommended that the BOS
 sign the license asap.
Question:

 What would have happened by now IF
 Verizon had focused all of that lobbying
 money and manpower on negotiating with all
 cities/towns? with Lakeville?
Recommendations:




          April 9th hearing?
           Resume Timeline

1.Less than one week after the March 13th
  meeting w/ Lakeville Subscribers, Verizon
  threw a new wrinkle into our negotiations.
  They said, “If they have to pay Comcast in
  order to connect to our PEG channels, that
  money would be taken out of our 2.5% GAR
  money.”
2.This we see as totally UNACCEPTABLE!
            Resume Timeline
3.Our cable attorney is unaware of any other
  town in the Commonwealth who has this kind
  of language in their license. Why Lakeville?
4.The LCAC sees this as Verizon going back on
  its word, introducing this into the negotiations
  at this late date.
5.We told Verizon that this was unacceptable,
  and have not heard a word directly from them
  since.
           Resume Timeline
6. On June 5th, the Mass. House and Senate
subcommittee on telecommunications held a
hearing on Verizon’s bill to require all Mass.
cities/towns to decide w/in 90 days on all
Verizon licenses. At that hearing Verizon
reps. told the committee that, in the bill,
cities/towns would be able to require 6% of
Verizon’s GAR be paid to the town. This is
NOT what Verizon is offering Lakeville, and
is misleading at best.
            Resume Timeline
7.In mid-June a Verizon rep called the BOS’s
  office to set up a meeting with the BOS to ask
  them whether they were “satisfied” with the
  way negotiations were being handled by the
  LCAC.
8.When our town administrator told him what
  Verizon’s own positions were and that the BOS
  had been kept very aware of what was
  happening, he NO LONGER WANTED THE
  MEETING.
          Resume Timeline
9. In early July a Lakeville subscriber called
Bob Marshall (chairmn.) to ask what the status
of Verizon negotiations was. After telling him
all of the above, Bob invited him to call the
Verizon rep who had wanted the BOS meeting
to find out where things stood with Verizon.
10. He said he was told that things were
“progressing” well and things “should be
wrapped up soon.” When Bob called, he got a
slightly different answer.
             Resume Timeline

11. He told Bob that the Verizon negotiator would
  be hearing from his boss and we should be
  hearing from him soon.
12.In mid July, Bob contacted our cable attorney
  to make sure he knew and to ask if he had heard
  anything. He had not.
13.That’s where things stand as of 7/17/07.

				
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