The county where I live, Montgomery County, Md., has always had a reputation as being anti-business. Some companies simply moved across the Potomac River to Virginia to escape the heavy hand of government. A cable company can't do that. So Comcast and its predecessors put up with it. But not Verizon. Verizon has filed a lawsuit in the Federal District Court, claiming that Montgomery County's cable franchising law violates both the federal antitrust laws and the First Amendment free speech protections. While some of the detailed claims may be a little exaggerated, on balance it looks like Verizon is justified.

Jeffrey Krauss President of Telecommunications &Technology Policy

Of course, this is just one tactic in the overall campaign toward a federal franchising law. But if other franchise authorities are behaving this way, a federal law can't be far behind.

Verizon hasn't actually filed an application for a franchise yet. According to the complaint, last year county officials told Verizon not to file but instead to participate in closed door negotiations with county staffers first. Imagine that–closed door negotiations in a county that considers itself squeaky clean. The idea was to extract from Verizon the same level of financial tribute that Comcast now pays. But the county doesn't need another institutional network for county government use, because Comcast already pays for that. Instead, the county's negotiators wanted Verizon to install and operate a network of 100 WiFi hot spots throughout the county.

According to Verizon, the county law imposes the 5 percent franchise fee not just on video revenues, but also on Internet access and on telephone service if these are carried on the same plant as the video service. Well, the county law may say that, but federal court decisions already make it clear that the franchise fee can only be imposed on revenues from video service.

And Verizon is exaggerating the county's requirement to carry 13 PEG channels, which is what Comcast carries, claiming that it is equivalent to 65 PEG channels because 13 x 6 MHz = 78 MHz of bandwidth, which has the capacity to carry 65 standard definition digital channels. (Who watches these channels, anyway?)

But there is no exaggeration that the county demands an additional 3 percent of revenues, beyond the 5 percent franchise fee, to fund PEG activities and support institutional network operations. In fact, the county treats the additional 3 percent as just another tax, flowing through only a small percentage to the PEG operations and keeping the rest in general tax revenues.

Nor is it an exaggeration that the county required free cable service for all county government buildings and all non-profit organizations in the county (requiring free service is equivalent to rate regulation), and required that Verizon pay all the fees for the county's outside attorneys, engineering consultants and financial consultants.

It's no exaggeration, because that's what the county extracts from Comcast. The county says that Verizon should play by the same rules as Comcast. Some rules! Terry Bienstock, former general counsel at Comcast, told me he has no sympathy for Montgomery County and its "over-reaching demands."

The county has had plenty of opportunity over the years to hone its techniques. Each ownership turnover extracted more tribute. And there were plenty. The franchise was first awarded to Tribune-United in 1983, which sold it to Hauser Communications in the late 1980s, then to Southwestern Bell in 1992, then to Prime Cable in 1998, and finally to Comcast in 2000.

And according to Verizon's complaint, the county insisted on regulating customer service for all of Verizon's network and services, not just its video service. This is probably Verizon's greatest fear. Verizon, formerly known as the Chesapeake and Potomac Telephone Company, has always been the local exchange telephone carrier here. Unlike Comcast, which is required by the franchise to have customer service reps available to take complaints 24x7, the telephone company has no such requirement. In fact, you can forget about contacting Verizon outside of normal business hours. In short, Verizon hates the idea that it would have to improve the quality of its customer service to the same levels as cable systems must provide.

Verizon isn't merely whining. On balance, the county's franchise requirements are truly egregious. The county's response is that the "...real issue in the case has nothing to do with free speech, and everything to do with the company's refusal to acknowledge the county's rights to protect county consumers...." It's precisely that arrogant attitude–that the county knows what's good for its citizens better than the citizens themselves know–that has gained Montgomery County its reputation as being anti-business.

Finally, while the county is "protecting" its citizens–often against our wishes–it is foreclosing the very competition that would benefit the poor "protected" citizens. Every time the county raises or imposes new fees, service providers pass them along to their customers in the form of rate hikes. So, as a tax-paying citizen, I not only get to foot the county's legal bills as it fights to preserve its control over cable franchising, but I also get to pay more for my service.

Have a comment? Contact Jeff via e-mail at: jkrauss@krauss.ws