Can FIOS Break Cable’s Stranglehold?
Verizon's high-speed fiber-optic services want to pull the plug on the cable industry, so what's stopping them?
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Illustration by John Ceballos.
August 03, 2007 by Steven Castle

You’ve probably heard that telephone giant Verizon is rolling out its TV services with plans of running high-speed fiber-optic lines to every home. This should be a welcome change for anyone paying a monthly cable TV bill. Only Verizon has a little problem. Wireline TV services often require licensing at the municipal level, and that means negotiating contracts with many cities and towns where Verizon wants to offer TV service. But Verizon doesn’t want to take years haggling with each municipality. It wants statewide franchises to speed things up.

Naturally, some local officials want to maintain the right to demand that Verizon put up money for a much-needed traffic light in exchange for charging people to watch Dancing with the Stars. At least, that’s what Verizon claims. And maybe some towns have asked for those things.

Take it from someone who has recently helped to negotiate a municipal license with the county’s largest cable TV provider, Comcast: traffic lights and other community expenditures are not the issue here. The entire cable industry needs more competition—and the sooner, the better. Negotiate a cable TV license, and you’ll realize the virtual monopoly cable companies enjoy is far worse than most citizens and public officials realize. The cable industry has so many laws and regulations tilted in its favor that it simply isn’t a fair playing field.

Comcast certainly deserves some credit for being a technological leader among cable companies, but nearly every time in our negotiations that we asked for something we felt was reasonable and fair, we heard this refrain: “By law, we don’t have to do that.”

In one case, we thought it would be wise if our contract contained a clause requiring the company to upgrade its technologies if its network in our town proved to be antiquated or couldn’t handle the bandwidth of many high-definition channels. But guess what? We can’t require that. Federal law says so.

Cities and towns also can’t regulate TV programming or rates. They can’t regulate Internet services. Any money they’re paid from the cable company to operate town-owned cable access stations is “passed along” to subscribers in a fine-line charge at the bottom of their bills, meaning that the money is completely funded by the local subscribers and not by the cable company. In fact, there are too many eye-popping injustices in this process to list here.

Sure, other cable companies can come into a town and compete with the present cable provider, but this isn’t a realistic option in most smaller communities, as the investment to run new cable lines is too great. Also, a city or town can’t even get a contract with Comcast these days without agreeing to a clause that could award the cable company damages if another TV provider, including a satellite service, harms Comcast’s business. Which begs the question: Is this still America?

So I say bring on the fiber. The only traffic light I’m looking for is one with a big green light.

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Steven Castle - Contributing Writer
Steven Castle is Electronic House's managing editor. he has been writing about consumer electronics, homes and energy efficiency topics for two decades. He is also the co-founder of GreenTech Advocates.

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