Remark of Ratepayer Advocate I/M/O RCN Service Quality Hearings Regarding RCN Telecom Services of NJ, INC. DOCKET NO. CX0170460.

REMARKS OF BLOSSOM A. PERETZ, ESQ.
DIRECTOR, DIVISION OF THE RATEPAYER ADVOCATE

AND

ELANA SHAPOCHNIKOV, ESQ.
ASSISTANT DEPUTY RATEPAYER ADVOCATE

I/M/O RCN SERVICE QUALITY HEARINGS REGARDING
RCN TELECOM SERVICES OF NJ, INC.
DOCKET NO. CX0170460

PRINCETON BOROUGH MUNICIPAL BLDG.
PRINCETON, NEW JERSEY

SEPTEMBER 6, 2001

Good evening Acting President Hughes and Commissioner Butler.

I am pleased to provide comments on behalf of Blossom Peretz, Director of the Division of the Ratepayer Advocate, at this evening’s hearing. The Ratepayer Advocate has worked closely with the New Jersey BPU staff to address the continuing concerns of cable consumers throughout the State. The majority of complaints have mostly focused on rising cable rates, and by working with the BPU, we have been able to secure millions of dollars in refunds and adjustments for consumers. However, when the rising cable rates are coupled with poor service quality, the subject of this evening’s hearings, there is clearly a need to examine how ratepayers can gain relief.

We would like to commend the board for initiating this inquiry. We contend that both issues, rising cable rates and deteriorating service quality, are symptoms of the same problem, the lack of competition in the cable TV marketplace. As you know, in New Jersey, cable providers have virtual monopolies in their respective service areas. This is precisely the problem here with RCN. The FCC’s Seventh Annual Report on the Status of Competition in the Market for the Delivery of Video Programming, states that in areas where there exists head-to-head competition, cable providers responded by increasing programming choices while maintaining lower rates, and improving service quality. A few years ago, the Ratepayer Advocate requested that the New Jersey Legislature conduct an investigation into the state of video distribution in New Jersey modeled after the FCC’s Annual Assessment of the State of Competition in Markets for the Delivery of Video Programming. Today, the Ratepayer Advocate asks this Board to consider making a similar investigation into the service quality of all of the cable systems in New Jersey, including RCN. The Ratepayer Advocate strongly believes that preventing inferior service before it becomes a problem is as important as alleviating existing service quality concerns.

Despite the goals of the Federal Telecommunications Act of 1996, competition has not flourished in the New Jersey market, and consumers are mostly relegated to obtaining cable service from the sole provider which has the franchise agreements within their municipality. DBS services, as well as open video systems (OVS) have not created the competitive choices envisioned under the 1996 Telco Act. Without the ability to exercise that competitive choice, consumers must be protected from the potential and/or actual adverse effects of a cable operator operating essentially as a monopoly provider of services.

That is why our office is continuing to research and endorse avenues to both stimulate competition and provide municipalities with tools to gain increased benefits for their constituents in the cable franchising process. For example, we have testified in support of measures to require mandatory provision of discounted rates for senior citizens. We are also exploring initiatives used in other states to promote competition, and as always, we are a vigilant advocate in protecting ratepayer’s rights to receive quality service from their cable provider. To that end, we look forward to working with both the BPU and the municipalities to address these issues, as well as ensure that consumers receive the quality of service they deserve.

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