In Island Towns, Dissatisfaction With Cable Service Simmers

Fiber optic cables being laid on Jersey City Avenue and Route 35 South in Lavallette, Feb. 2023. (Photo: Daniel Nee)

Island residents are telling their elected leaders that they want more competition when it comes to cable television and internet service – but despite rumors that spread about “exclusive” deals and future plans, municipal officials have little influence over which companies compete within their borders.

In recent weeks, the issue of cable service has been discussed at borough council meetings in Lavallette and Seaside Park. In Seaside Heights, the borough has brought the issue of alleged poor service to the state Board of Public Utilities, which has been collecting facts and acting as a mediator for about two years.

Residents complain that since Cablevision Systems, which ran the Optimum brand of cable television, internet and phone service, was purchased by French cable operator Altice, service has deteriorated, internet speeds have become frustratingly slow at times, a local office was shut down, and costs have risen. The company has said it has upgraded the island’s systems, added more bandwidth and its cost increases have been driven by higher prices demanded by television networks.

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What’s True and What’s Not?

A popular belief is that cable franchise agreements – contracts that set forth the terms for a cable company to operate within a municipality – are exclusive in nature. In fact, federal regulatory law expressly prohibits exclusive franchise agreements (47 U.S.C.A. §541(a)(1)), though the policy rarely increases competition.

The franchise agreements normally include language that specifies a minimum level of service, the availability of public access stations, services for government and educational agencies, and an annual fee paid to the municipality for the length of the agreement. Any cable provider can enter into a franchise agreement with a local government, however cable lines are not common carriers and headends are not co-located. That means that one cable provider cannot tap into the lines or backend technology of another, and while any number of competitors could offer their service in one town, each company would have to lay out the capital investment to physically wire the entire community and expand its service area.

Verizon is an outlier. The telecommunications company applied – and was granted – a statewide franchise agreement for its FiOS service in 2006. The franchise, in 2020, was extended by another seven years. In exchange for the statewide permission to wire any community in New Jersey, the company hatched an agreement with lawmakers from both the urban and rural portions of the state. Verizon agreed to wire the 70 most densely-populated municipalities in the state, largely urban centers, as well as each county seat, which ensured the service would have a footprint in all regions of New Jersey. On the barrier island, Ortley Beach and the North Beach communities have access to FiOS service since their parent community, Toms River, is the seat of Ocean County.

To date, Verizon has wired 369 towns for the service, and has announced that it will wire Lavallette and offer service there. There are a few blocks in Seaside Heights that have gotten the service as well, but Seaside Park has lobbied unsuccessfully for years to have FiOS service offered there.

“Right now, Cablevision is the only franchisee in Seaside Park with regard to cable,” said Mayor John Peterson. “I did ask them about Verizon – I said we see their lines around – and interestingly, they said Verizon has been doing that through many municipalities for a couple of reasons. They only need to petition the BPU to start operation of their franchise. At this point, it’s really up to Verizon whether they want to provide cable service here – it’s up to them, not us.”

Verizon, for its part, is looking toward broadband wireless technology to ultimately supplant its wired network in the delivery of television and internet data service, leading to a slowdown of FiOS deployment. The company has also struggled to justify expansion of FiOS given the required manpower commitment and cost of union labor in wiring municipalities that are not required under the statewide franchise.

What’s The Answer?

In Seaside Park, some residents have asked the borough to refuse to renew Altice’s franchise due to the complaints that have been levied by customers. At a recent council meeting, the borough attorney was tasked with researching the formal procedures for non-renewal, which involves a hearing process and the involvement of the BPU.

The “ascertainment study,” however, was deemed to be a duplicate process of what could be accomplished at a lower cost by working with the BPU to settle disputes with Altice. Additionally, if the franchise were to be non-renewed, there is no guarantee another company would buy the franchise, which could theoretically lead to a total loss of service.

In Lavallette, officials are dealing with what some called misinformation.

“It seems that Verizon is telling potential customers that they cannot provide TV service because of the franchise agreement with Optimum,” said Councilwoman Joanne Filippone. “But Optimum’s arrangement is with us – Verizon’s is with the state of New Jersey. They have a statewide franchise. We don’t have to break any agreement.”

Lavallette is currently eight years into a 10-year agreement with Optimum, although the agreement would not prohibit another cable company – Comcast, Spectrum or smaller operators – from applying for their own franchise. Verizon has the aforementioned statewide franchise agreement.

There is also word that Altice is continuing its upgrade of services on the island, though a company spokesperson would not elaborate on the specifics of ongoing capital projects.

“Cablevision (Altice) is installing fiber optic cable in town,” said Mayor Walter LaCicero. “They are feeling the pressure of Verizon entering this market.”

While Verizon has confirmed to Shorebeat that its FiOS service will be offered in Lavallette, it was not clear if the service would include its television product or just its high-speed internet product.

“Verizon may provide you with internet access which can ultimately provide you with TV,” said LaCicero, referring to the trend of “cord-cutting” in which customers drop paid television service in favor of internet-based streaming services.

Seaside Park officials said Verizon has been installing new fiber optic cable within the borough.

“With Verizon, it’s always been up to them and they’ve never wanted to do it,” said Councilman Frank “Fritz” McHugh. “Maybe now that they have the fiber optic lines, there’s a chance they will.”

Ultimately, however, the matter is largely out of the hands of government officials on the local level – and even in an environment where competition is encouraged, there are no guarantees that wiring a town for service would represent a financial win for the provider, Seaside Park Councilwoman Gina Condos.

“Based on our conversation last time [with Verizon], it’s probably a lot of work without a significant return,” she said.