Will Verizon's FiOS TV in NY dent US cable monopolies?
Although fuller implementation of FiOS won't be easy, Verizon might soon be giving Time-Warner and Cablevision some real cable TV competition in New York City, now that a committee has given its okay to a sweeping franchise plan.
By June 30, 2014, all residents of all five boroughs of New York City will have access to FiOS cable TV, as a result of a vote taken yesterday by the city's Franchise and Concession Review Committee.
Right now, Verizon is only reaching about 20 percent of New York City households with FiOS, and most of those households are located in Manhattan or Staten Island. Furthermore, Verizon's current FiOS coverage in New York City includes Internet access coverage only, not cable TV.
Still, to make FiOS TV actually begin to happen in the Big Apple, Verizon must first manage to jump through the remaining hoops in the regulatory approval process. That means now obtaining final approval from both the Mayor's Office of the City of New York, and the New York State Public Service Commission.
Verizon contends that the deal will help to fight a monopolistic approach to cable TV pervading not just New York City but other parts of the US.
"After many years, real choice for TV is closer to reality for New York City residents," said Monica Azare, Verizon's senior VP for New York and Connecticut, in a statement. "When our proposal is fully approved, New York will be the first major city in the nation to break the cable TV monopoly and bring the network of the future to its residents today."
The extensive proposal also "includes, but is not limited to, provisions regarding consumer protection, public, educational, and government channels, and a schedule for deployment and service availability," according to a document posted on the committee's Web site.
Today, most New York City households have only one cable provider, even though two major cable companies operate in the city.
Time Warner covers Manhattan, Staten Island, Queens, and the western part of Brooklyn. Cablevision, on the other hand, services the Bronx and eastern Brooklyn.
If the proposed 12-year franchise deal goes through, however, Verizon will start offering FiOS TV in sections of all five boroughs by the close of 2008, Azare said. But still, under terms of the agreement, only Staten Island will be almost entirely FiOS TV-ready by year's end, with coverage of 98%.
Within this calendar year, coverage will be extended to 57% of Manhattan, but only to 15% of Queens, 13% of the Bronx, and 12% of Brooklyn.
Also, even if Verizon clears all of the approval hurdles, implementing the plan could be costly. If Verizon fails to meet its annual coverage goals, it will be charged fines of millions of dollars per year.
Unless 29% of all five boroughs is wired for FiOS by the end of this year, for example, Verizon will be fined $35 million. A total of 79% of New York City must be FiOS-ready by 2012, or the company will have to cough up $10 million.
Fines will keep being levied through 2014, when Verizon will be charged $1 million unless 100 percent of all five boroughs are covered by that time.
In any case, Verizon will also be required to pay the city $4 million for wiring municipal facilities, along with an annual franchise fee equivalent to 5% of Verizon New York's gross annual cable revenues.