Verizon Sues Time Warner Cable Over Ads

Telco Alleges Cabler Makes False Claims About FiOS Service

By Todd Spangler -- Multichannel News, 4/9/2008 10:21:00 PM

Verizon Communications filed a federal lawsuit Wednesday against Time Warner Cable, alleging the cable operator’s TV ads make “blatantly false” statements about its FiOS services in an attempt to dissuade customers from switching.

Verizon -- which is seeking a temporary restraining order to stop Time Warner Cable from running the ads -- said the Time Warner Cable ads falsely assert that Verizon's FiOS TV service requires a satellite dish; that the phone company was later to adopt fiber-optic networking technology; and that Time Warner Cable's fiber-optic network is superior.

“These blatantly false assertions could not be more devastating to Verizon’s $23 billion investment to compete with Time Warner and other cable companies on the provision of the triple-play service to consumers,” Verizon said in its request for a preliminary injunction.

“Television service is obviously the traditional strength of the cable companies, and Verizon’s ability to provide television service through the FiOS network is essential to Verizon’s ability to compete with Time Warner for [the] all-important ‘triple play’ of television, Internet, and telephone services,” Verizon said. “It is especially because of the extraordinary impact of these false assertions that Verizon seeks the extraordinary relief of a temporary restraining order.”

Time Warner Cable spokesman Alex Dudley said in a statement, "We feel the lawsuit is without merit and we look forward to defending against it in the appropriate venue."

Verizon filed the suit in the U.S. District Court for the Southern District of New York. The telco seeks unspecified monetary damages, an injunction barring Time Warner Cable from running the ads and an order requiring the cable company to run ads retracting the claims.

The main spot Verizon disputes is Time Warner Cable’s 60-second commercial in which a door-to-door Verizon sales rep rings the doorbell of a Time Warner Cable customer and says, “Good morning. Have you heard about the fiber?” as he waves his hands and beams of light stream from his fingers.

The customer tells the Verizon rep Time Warner Cable has “been using fiber optics for over a decade. Welcome to the program!” and asks, “Just to get TV from you now, don’t I need a satellite dish?”

A second 30-second spot omits the satellite dish reference but includes the line about Time Warner using fiber optics for more than a decade.

Verizon alleges that Time Warner Cable is deliberately trying to confuse FiOS -- which provides TV, Internet and voice over a fiber-to-the-home connection -- with the telco’s “synthetic bundle” comprised of DirecTV, phone and DSL Internet service.

Verizon said FiOS is available to more than 2 million households in the New York market, and offers the DirecTV/DSL/phone bundle only in areas where it has not built out the fiber-to-the-home network.

“The consumer in the advertisement represents someone who is able to purchase FiOS,” Verizon said in its request for a preliminary injunction. “The commercial’s Verizon salesman is there to tell him about (and sell him) the FiOS product. And the consumer’s skepticism is not directed to Verizon in general, but specifically to Verizon’s ‘fiber’ product – i.e., FiOS.”

As for Time Warner Cable’s fiber-optic claims, Verizon says it has used fiber optics in parts of its networks since the 1970s.

And Verizon claims that a fiber-to-the-home network is “undeniably superior” to cable:

Using the increased video and data bandwidth of fiber – rather than coaxial cable – to carry signals allows more data to get to and from the home faster, decreases the chance that the signal will be disrupted, reduces the picture freezing, pixilation, dropped packets of data, and other interruptions in service and quality associated with coaxial cable, and provides a more durable conduit that is more resistant to corrosion.

Many cable operators -- including Comcast, Cablevision Systems and Cox Communications -- have tried to blunt Verizon’s FiOS marketing message by pointing out they have used fiber-optic networks to deliver services for years.

According to Verizon's lawsuit, Time Warner Cable has run the “satellite dish” commercial more than 160 times since March 3 on six of the major broadcast channels in the New York market, including WABC, WNBC and WCBS.

In addition, Time Warner has aired the commercials numerous times on several of its own cable television channels and plays them on its Web site for the New York/New Jersey region.

Verizon said it first learned of Time Warner Cable’s satellite dish commercial on March 31, and sent a “cease and desist” letter the next day demanding that Time Warner Cable discontinue the spot.

According to Verizon, Time Warner Cable responded by rejecting the assertion that the commercial is false or misleading -- and told the telco it intended to continue running the commercial.

The case is docket 08-cv-03468 in the U.S. District Court for the Southern District of New York, with Judge Lewis A. Kaplan presiding.