News

Ad Noise Raised

4/12/2008 2:00 AM Eastern

A pair of Time Warner Cable TV ads are endangering Verizon Communications' $23 billion investment in fiber-optic networks.

That's according to the telephone company, which slapped the second-largest cable system operator in the U.S. with a false-advertising suit in federal court.

Verizon's lawsuit alleged the cable operator's TV ads make “blatantly false” statements about its FiOS services to dissuade customers from switching, and seeks a temporary restraining order to stop the ads.

According to Verizon, the Time Warner Cable ads falsely assert Verizon's FiOS TV service requires a satellite dish; that the phone company is new to fiber-optic networking technology; and that Time Warner Cable's fiber-optic network is superior.

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.”

The main spot Verizon disputes is Time Warner Cable's 60-second “satellite dish” commercial.

In the commercial, a door-to-door Verizon sales representative 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?”

Verizon alleges that Time Warner Cable is trying to deliberately confuse consumers about the FiOS offering — which provides TV, Internet and voice over a fiber-to-the-home connection — and the telco's “synthetic bundle” comprised of DirecTV, phone and digital subscriber line Internet service.

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

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 because it “decreases the chance that the signal will be disrupted,” among other benefits.

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 ( “Fiber War of Words,” April 7, 2008, page 8).

According to the lawsuit, which Verizon filed in the U.S. District Court for the Southern District of New York, Time Warner Cable has run the “satellite dish” ad more than 160 times since March 3 on six New York broadcast stations, including WABC, WNBC and WCBS.

Meanwhile, Verizon last week agreed to discontinue television ads for FiOS TV which quote a CNET News.com article that included the phrase “a near-flawless TV experience.” The technology news site said the quote was taken out of context.

The CNET News.com article from June 21, 2007, by telecom reporter Maggie Reardon, is not a review and included the “near-flawless” phrase in explaining that Verizon faces strong incumbent competitors in its markets, including Cablevision.

“This fierce competition reinforces how important it is for Verizon to offer a near-flawless TV experience,” Reardon wrote.

Verizon senior vice president of media relations Eric Rabe, acknowledged in a blog posting that the CNET article was not a review and said the telco will stop using the quote when the campaign finishes its run in mid-May.

But Rabe also defended Verizon's use of “near-flawless” in the TV spot, claiming that “a fair reading of the CNET piece is that Verizon knew we had to provide near-flawless TV (and we did).”

In the Verizon ads, as the CNET blurb flashes on the screen, a voiceover says: “Your HDTV doesn't want cable. Give it Verizon FiOS, for picture quality the experts call 'near-flawless.'“

CNET senior editor David Katzmeier posted a blog entry April 9 pointing out that the referenced article was a news story, not a review.

“Nowhere does the News.com article give any opinion, implied or overt, about FiOS TV's actual picture quality. And CNET Reviews has not evaluated FiOS TV,” Katzmeier wrote.

Verizon did obtain permission from CNET's permissions department to use the quote for one year, according to Katzmeier, but he said “the ad execution did not get reviewed” by CNET.

“I appreciate Verizon's concession, and I realize that these things happen all the time,” he wrote.

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