Verizon wins Phila. franchise

City Council breathed competition into Philadelphia's cable market yesterday, approving a 15-year franchise agreement with Verizon Communications Inc. that will bring the FiOS network into the city and break Comcast Corp.'s monopoly.

Verizon overcame resistance in Council by offering assurances on minority hiring and committing to rolling out its fiber-optic network evenly across the city over seven years, and the deal passed by a 17-0 vote.

Verizon's investment is estimated at between $800 million and $1 billion. Company officials have said they could begin offering service in some areas by year's end.

Mayor Nutter said he would sign the bill.

Before he does, he is expected to push Verizon to move up some of its agreed-upon payments totaling $6.7 million for the city's nascent public-access network.

"This is a significant achievement for the city of Philadelphia," Nutter told reporters yesterday. "There are a lot of cities that want this kind of additional service. Verizon could have chosen any number of cities. They wanted to be in Philadelphia."

"We're thrilled to have the opportunity to bring this product to Philadelphia," said Gale Given, president of Verizon Pennsylvania. "They're going to love it."

Competition almost always brings one thing: an instant improvement in customer service, said Johannes Bauer, professor of telecommunications, information studies and media at Michigan State University.

Prices won't necessarily drop in the short term, Bauer said, although having a second provider could contain price hikes in the long term. Providers often expand their offerings and pricing options in a competitive market, he said.

"With competition in the market, I think we'll see improvements in the quality of products that are being provided," Bauer said.

Comcast Corp. spokesman Jeff Alexander said the Philadelphia-based cable giant was prepared for company in the city's cable market.

"Competition is nothing new for Comcast. We compete effectively every day and have done so for years," Alexander said. "We applaud City Council's diligence during the review process, and we look forward to competing with Verizon in the city of Philadelphia, as we already do across many of its suburbs."

The agreement navigated a contentious Council vetting process. Introduced in November after five months of negotiations between the Nutter administration and Verizon, the proposal faced resistance from Council members who wanted their districts to be included in the early years of the build-out.

Verizon changed its map to accommodate those wishes, but then faced demands that the company link up with a minority-owned cable provider, and that it move up the schedule of payments to the newly formed Public Access Corp.

Verizon has committed to paying $4 million in operating funding and $2.7 million for capital costs for public access, but it doesn't begin those payments until the sixth year of its contract. Nutter has said it isn't fair to ask Verizon to match Comcast's similar payments in its early years, before Verizon has a customer base to pay for it.

Councilman Bill Green had threatened to offer an amendment to force Verizon to make payments earlier. But Public Access Corp. board chairman Louis Massiah said he would trust Nutter, a longtime public-access advocate, to persuade Verizon to move up at least some portion of those payments so public-access television, scheduled to go online by the spring, could operate properly.

"We're definitely counting on the mayor to deliver," Massiah said.

Council members said they were comforted by Verizon's written commitment to add 100 jobs to its city workforce, and to increase its minority-contracting percentage from 14 percent now to 30 percent by the final year of the contract. Verizon said it currently spends $114 million on minority- and women-owned contractors in the city.

Despite its efforts, Wilco Electronics Inc. - which shares a sliver of the city's cable market with Comcast, serving primarily Philadelphia Housing Authority tenants - was not included in the franchise agreement.

Wilco's executive vice president, Brigitte F. Daniel, said Verizon had committed to giving Wilco a chance to compete, although she acknowledged that she had no guarantees in writing.

"We're hoping the dialogue remains open and the commitments are kept," Daniel said.

Council members credited Majority Whip Darrell L. Clarke, who orchestrated negotiations among various parties as chairman of the Committee on Public Property and Public Works.

Clarke said the agreement was "not a perfect bill," with work still to be done on issues such as public access. But Green said the final agreement "is better, due in large measure to his work."