My Turn

Verizon Offers To Pay Tributes -- Just Like Cable

4/16/2008 6:57 AM

Verizon’s being required to seek a franchise to offer fiber-based cable television service in New York City is likened to “legalized bribery” today by an analyst who follows one of Verizon’s key FiOS TV vendors.

To which the response here is: um, yes, but so is every cable franchise. Should Verizon be any different?

Anton Wahlman, a prominent technology analyst with ThinkPanmure, sent out a note this morning (not posted online so not linkab;e) related to Verizon and vendor BigBand Networks and concerning the telco’s application to provide FiOS TV service throughout the Big Apple. Its headline was “Verizon’s Struggle With Mercantilism And Institutionalized Bribery.”

“We think it is a sad day in America when Verizon has to apply for a permit in order to offer consumers an alternative. This ‘franchising’ process has all the elements of legalized bribery, in our view; otherwise, why would Verizon have to apply for a permit at all?” Wahlman asked.

He cites Apple’s coming to town with a glitzy store, to compete with Microsoft, Dell, Nokia, and even cable TV with its Apple TV – all without need of permit.

The franchise process – in which city committees, the council and state regulators all get to have their say and impose requirements in the way of revenue percentages, free government-agency fiber networks and support for constituents’ producing TV shows on public-access channels – is that has led to cable companies paying their pounds of flesh for decades. It’s well established. Cities control “rights of way,” the way the feds control the “air waves” it’s reclaiming from TV stations and selling off. Congress hasn’t yet agreed to overrule the process.

I credit Verizon for going through the franchise paces and competing on as fair a basis as possible with cable. AT&T has tried to separate itself from such mundane niceties, with mixed results.

Verizon’s commitments, cited in its press release on Monday, include a guarantee to build everywhere in the city (which makes sense as it is upgrading existing phone-line infrastructure) – something geographic duopolist incumbents Time Warner and Cablevision are unlikely to do as their networks don’t overlap.

Verizon also said it would pay the same 5% gross revenue fee that the cablers pay; install an “institutional network” for city government and comply with existing customer-service standards.

All part of being a good neighborhood cable provider.

As for me, I look forward to the day my Upper East Side building is served by Time Warner Cable, RCN and FiOS TV. However long it takes or whatever Verizon has to pay to do it.

March