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Verizon sues Maryland county over cable license

Company says affluent Montgomery County has made illegal demands regarding taxes, fees and public channels.

Verizon Communications filed a lawsuit on Thursday to invalidate a Maryland county's licensing process to offer subscription television service, arguing that it was illegally delaying its expansion plans.

In what the No. 2 U.S. telephone company described as its first lawsuit of this kind, Verizon argued that Montgomery County's franchising process violated U.S. antitrust and communications laws, as well as free-speech rights under the Constitution.

"We would prefer to reach agreement on a franchise that would offer Montgomery County consumers more choice for their cable services, but after a year of essentially fruitless negotiations, we are at an impasse," said John Frantz, Verizon vice president and associate general counsel.

The lawsuit marks a new tactic as Verizon tries to rapidly expand into the subscription TV business and compete with cable operators such as Comcast, which already has a license in Montgomery County, an affluent suburb outside Washington, D.C.

Verizon already has 13 franchises and about 100 agreements nationwide. Cable companies have expanded aggressively into the telecommunications and high-speed Internet businesses, challenging the traditional telephone carriers.

A representative of Montgomery County's office of cable and communications services was not immediately available for comment.

Verizon asked the U.S. District Court for Maryland to invalidate the county's cable-franchising law and order local authorities to negotiate a lawful agreement within 60 days.

Verizon alleged that the county illegally made demands, including the right to collect fees on phone and high-speed Internet services; that the company set aside about 65 channels for public, educational and government programming; and that it pay additional cash.

The lawsuit comes as the company presses Congress to simplify the process to obtain cable franchises so it can offer video service to compete against cable operators. However, it is unclear whether U.S. lawmakers will act this year.