A page one report in today's The Wall Street Journal indicates that Verizon is having difficulty launching FIOS-based television services in many parts of the country. Verizon plans to invest some $20 billion on a large-scale fiber-to-the-home deployment project, but is being asked for costly concessions on a town-by-town basis in exchange for a cable television franchise. According to the article:
Budget-strapped local officials, who have the final say over granting cable-TV-service franchises, are greeting the phone giant with expensive and detailed demands. In New York state, Verizon faces requests for seed money for wildflowers and a video hookup for Christmas celebrations. Arlington County, Va., wants fiber strung to all its traffic lights so it can remotely monitor traffic flow. Holliston, Mass., is seeking free television for every house of worship and a 10% video discount for all senior citizens. Others want high-speed Internet for sewage facilities and junk yards, flower baskets for light poles, cameras mounted on stop lights and Internet connections for poor elementary students.
FIOS is meant to compete with services like Comcast Digital Cable, Time Warner Digital Cable, and IO Digital Cable from Cablevision. These are premium, broadband-based television services with an emphasis on video on demand and bundled Internet access.
The providers have attached high monthly fees to these services in towns where they have monopolies. Beyond switching to DirecTV or The Dish Network, which can't provide broadband Internet service because of their satellite delivery method.
Walt Mossberg pointed out in September that FIOS has already changed the competitive landscape in high-speed Internet access in a limited number of areas of the Northeast. These are places where Verizon has decided to deploy FIOS in advance of permission to offer television services.
America needs a competitive digital television marketplace. More than one broadband solution in each town would be ideal. If the issues with the cable franchising process are that it's too political and too dependent on the whims of local franchise boards, maybe the solutions are to regionalize these boards and bring them into the 21st century by creating new rules that are designed for a competitive market rather than a monopoly. Deployment of a fiber-to-home network is very expensive, so regulatory barriers should be lowered to Verizon for a period of time.
If incumbent cable franchisees complain, they should be offered similar terms for similar capital investments. If upgrades have already been made, the requirements of their franchises should be temporarily relaxed in the same fashion offered to Verizon. [ Subscription required to view many articles from the Wall Street Journal ]