Verizon advances on video

Verizon last week nailed down its second cable franchise — its first in Texas — and got a clear view of the opposition it can expect from the cable industry as it goes community-by-community to add video to its fiber-to-the-premises initiative.

Because Verizon has chosen to deliver video via an RF signal and not use evolving video over IP as SBC Communications is doing, it must acquire local cable franchises in each community it serves. That complicates the already complex and expensive process of building FTTP. It's less clear whether IP-based video services will require the same franchise arrangements.

In Sachse, Texas, the Dallas suburb where Verizon earned its cable franchise, incumbent provider Comcast tried to convince local regulators they weren't holding Verizon to the same requirements imposed on Comcast. Under fairness provisions, the cable company said, the city would not be able to hold Comcast to its original agreement.

Sachse's legal counsel maintained that the Verizon agreement is “fair and equitable,” said Bill Atkinson, city manager.

“The Verizon plan is very attractive to us because it will provide service to 100% of our residents, which the cable company doesn't, with a new type of service that isn't available now.”

Comcast “basically presented a laundry list of problems,” said a Verizon spokesman. “City leaders looked beyond Comcast's stall tactics.”

Angel Biasatti, executive director of communications for Comcast in Texas, said in a statement Comcast isn't backing off in Sachse.

“Comcast looks forward to discussing those franchise elements with the city that can be reduced or eliminated to create parity between franchises awarded by the city,” she said.

Regarding its video strategy, Verizon hasn't ruled out using IP, said a second Verizon spokesman. “We're keeping our eye on that. It will be part of the mix going forward.”

Matt Davis, director of broadband access technologies at the Yankee Group, said, “There are so many points of failure on untested IP video systems that I'm not surprised that in the early rollouts, they want to go with something tried and true.”

As it is, Verizon is taking significant risk by building a cost-heavy FTTP infrastructure, said John Celantano, president of the Skyline Marketing Group, whose numbers show Verizon is investing $1200 per subscribing household to build its new network — and that's assuming 90% penetration.

“They are making a huge investment, and I'm worried,” he said.