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City to talk with Verizon on cable TV service
Wednesday, August 06, 2008

Pittsburgh City Council today authorized hiring the Cohen Law Group to negotiate a contract to bring Verizon Pennsylvania Inc. into the cable TV market.

Howard Stern, director of the city's information services, said a citywide build-out could take years, "but we are hoping to have an agreement in place by late fall" after several public hearings.

Verizon approached the city in the spring, the first time a competitor has shown an interest in investing the "many millions" it takes to build a cable system, he said. Comcast has been the only choice for cable subscribers since it captured what had been the domain of TCI before TCI merged with AT&T in 1998.

Comcast currently pays the city 5 percent of its gross revenues each year in franchise fees, which comes to about $4.1 million, said Mr. Stern. The city's agreement with Comcast expires at the end of next year.

Considering that Verizon and Comcast would be sharing customers now served exclusively by Comcast, the franchise fees will probably stay about the same if they don't dip slightly in case of a price war.

Mr. Stern said the city hopes that, by opening the market, both companies will improve their offerings to customers. He said that unless Verizon prices its rates competitively, customers would not have incentives to switch from Comcast.

Verizon spokesman Lee Gierczynski said Verizon began cable service last year in the suburbs of Pittsburgh and Philadelphia after two years of building its network. It has agreements with 80 smaller municipalities, "and it only makes sense that we would want to reach as many customers as possible with new services."

First published on August 6, 2008 at 12:22 pm
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