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Video services

Verizon Steps Up Franchise Fight

Though a nationwide video franchising system won't be in play anytime in the next few months, Verizon Communications Inc. (NYSE: VZ) says it has "over 300 negotiations in play" to get local permission to offer video services in various municipalities across the U.S.

That surprisingly large number was dropped during Friday's Federal Communications Commission (FCC) open meeting, as Verizon's senior VP of video solutions, Marilyn O’Connell, fielded questions from FCC Commissioner Jonathan Adelstein about the barriers that local politics can place before a service provider's video rollout. (See FCC Brings Video Debate to Texas.)

O'Connell says Verizon would prefer to offer video services in the areas where it already has fiber deployed to homes. But because of the sometimes slow process of receiving approval for video franchises, it may have to expand deployment to make its numbers.

"I would rather follow my fiber build" to offer video services, O'Connell said. "I may not be able to do that. I might have to open new markets in order to accomplish that."

In Texas, where Verizon has a state-issued video franchise, the carrier has committed to making the service available to 1 million potential viewers in the Dallas-Fort Worth area by the end of 2006. Elsewhere, it hasn't stated a specific deployment or service uptake goal. (See Even Video Is Big in Texas.)

The carrier says it starts its franchise negotiations with local officials before any paperwork is filed, so the number of franchises it has actually applied for is nowhere near 300 yet. And critics of Verizon's approach say the company hasn't always been as interested in working with local authorities as it purports to be now.

"Eighteen to twenty months ago… they were not aggressively seeking franchises," says Lori Panzino-Tillery, the division chief for franchise programs for San Bernardino County. "What they were doing is offering templates -- take-it or leave-it agreements -- that sometimes were contrary to state and municipal codes."<./p> O'Connell, in her testimony before the FCC, countered it was the local officials in some cities that were making unreasonable network build-out requirements, thus slowing down Verizon's market entry. "These requirements would force us to build to imposed locations on an arbitrary schedule, even requiring building to the incumbent cable provider’s service area or to the local authority’s jurisdictional boundaries, rather than to our own. Such requirements can make deployment uneconomic."

— Phil Harvey, News Editor, Light Reading

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chip_mate 12/5/2012 | 4:06:16 AM
re: Verizon Steps Up Franchise Fight Fios TV would be nice if it were priced lower than satellite or cable.
Problem is monthly 'rental fee' for the dvr's. Satellite charges around $4/month for the dvr. For a dual disk dvr, Verizon is asking $13/month.
13 x 2 = $26/month in dvr fees alone! That pushes Verizon Fios TV about $5 over satellite and cable.
Too bad they don't understand pricing.
Verizon did the same thing with Voicewing VoIP. They priced it $10 more/month than vonage, etc.

What is my incentive to pay $5 more/month for Fios TV?

Any answers?

Bueller?
DCITDave 12/5/2012 | 4:06:15 AM
re: Verizon Steps Up Franchise Fight I think Verizon's equipment fees are just a reflection of the fact that they don't have mass market penetration with DVRs -- so they pass the savings on to you.

The incentive to pay more should be on quality, ease of use, and that kind of thing. I'd pay more for the bandwidth alone, but I'm weird that way.

ph
mrbhagav 12/5/2012 | 4:06:14 AM
re: Verizon Steps Up Franchise Fight
You may pay $5 more for Fios TV if you are getting more than a $5 benefit on the other two legs of the stool: data and voice from VZ.

$13/mo. is ridiculous. But I agree with Phil that this price will go down as Verizon achieves scale in its rollout. Remember that they are probably less than 1 million subs nationwide. It is also an issue of achieving some return on their upfront capex for these boxes, perhaps to justify the Fios business model internally.

$13x2x12=$312/year. How much do two double-disk DVRs cost on the market? $600? Thats a 2-year return on capex for Verizon. Not bad; sharheholders would say Aye to that.

I don't have Fios TV myself, so I am curious to know how the quality / diversity (VoD, SVoD, HDTV, etc.) of service and customer support compares to say Comcast or Time Warner.

Cheers,


"Fios TV would be nice if it were priced lower than satellite or cable.
Problem is monthly 'rental fee' for the dvr's. Satellite charges around $4/month for the dvr. For a dual disk dvr, Verizon is asking $13/month.
13 x 2 = $26/month in dvr fees alone! That pushes Verizon Fios TV about $5 over satellite and cable.
Too bad they don't understand pricing.
Verizon did the same thing with Voicewing VoIP. They priced it $10 more/month than vonage, etc.

What is my incentive to pay $5 more/month for Fios TV?

Any answers?"


DCITDave 12/5/2012 | 4:06:14 AM
re: Verizon Steps Up Franchise Fight Just to catch everyone up on what's been written about on this topic in the past day or so...

New today -- Some leftover bits in my notebook and camera from the FCC meeting:
http://www.lightreading.com/do...

Late yesterday -- A second day story on Verizon's claim that it is in negotiations with 300 cities over local video franchises:
http://www.lightreading.com/do...

Finally, from Friday, our wrap of the FCC's open meeting on video competition:
http://www.lightreading.com/do...
materialgirl 12/5/2012 | 4:06:12 AM
re: Verizon Steps Up Franchise Fight It is still a chicken and egg problem. If they price to profit at the start, they will never get the take-up needed to advance down that learning curve. You must suffer a loss to get in, like MST is doing with the Xbox.
chip_mate 12/5/2012 | 4:06:11 AM
re: Verizon Steps Up Franchise Fight You have missed the point, or I failed to clarify.
Either way, here are some additional points:

1) Video and Data together for $5 more/month than Satellite.
NO. I still have to pay $40 for my Fios fiber data feed.

2) Start up costs.
I was one of the first to get a satellite dvr and it was $4/month. They ate the cost of early adopters during the ramp up. Price never declined from $4. Doubtful VZ has a plan to reduce the $13/month price, but might have to as their 'take rate' isn't living up to estimates, and no one at VZ understands why. (hint: it's the dvr rental fees. They outweigh the Enh. Basic savings!)

3) Quality is the same from the Fios TV feed (friends house) I have seen.

4) Channels are similar to a degree (Fios TV has no AMC channel, but has 12 Discovery XYZ channels), but one could argue that having a $12/month tack-on option for 15 International language channels (pakistan, isreal, kenya, brazil, indonesia) is a nice option to have that satellite doesn't offer. Personally, I get confused listening to an Irish soccer commentator, let alone trying to figure out what language the guy from Pakistan is speaking, so that's not a draw for me.

Last item, can I get Fios TV and NOT have to pay $40/month for Fios fiber data, instead opting for DSL which is only $15/month?
Nope. VZ says I must buy their fiber data feed, which I love, but might be too much $$ for many customers, with little perceived return.

So, my point is, all things being similar, and Verizon charging $75/month (enh. basic + HBO package + 2x$13 for dvr rentals), the VZ Fios TV service is more than satellite at $70/month (enh. basic + HBO + 2x$4 for dvr rentals)
DCITDave 12/5/2012 | 4:06:08 AM
re: Verizon Steps Up Franchise Fight
re: "Last item, can I get Fios TV and NOT have to pay $40/month for Fios fiber data, instead opting for DSL which is only $15/month?
Nope. VZ says I must buy their fiber data feed, which I love, but might be too much $$ for many customers, with little perceived return."

Ah, so you do have to buy fiber bandwidth in addtion to TV. Interesting. Yeah, I'd like to know exactly where the bundling savings come in.

ph
DCITDave 12/5/2012 | 4:06:08 AM
re: Verizon Steps Up Franchise Fight re: "$13/mo. is ridiculous. But I agree with Phil that this price will go down as Verizon achieves scale in its rollout."

I have another bit of info to add on the HD front... DISH Network says its DISH HDDVR will go down in price from $300 to $99 (thanks to rebates) on April 1. Probably another issue of being closer to mass market scale than its wire-based competitors.

ph
chip_mate 12/5/2012 | 4:06:07 AM
re: Verizon Steps Up Franchise Fight "Ah, so you do have to buy fiber bandwidth in addtion to TV. Interesting. Yeah, I'd like to know exactly where the bundling savings come in.

ph"

ph,
I saw a "bundled savings" discussion start on this and another thread. I have yet to see where VZ stated they were creating a bundled savings event for their data/tv/phone customers. I believe we all assumed that was the case. We all wished that VZ would make it so. We are wrong.
Maybe that's part of their marketing magic. You think you're getting a bundled deal, so it must be true that you are saving $$ per month on having everything combined with VZ.

I love my Fios data. I really do. I WISH they would bundle Fios TV at a discount. I would buy Fios TV + Fios data in a New York minute if there was a savings.

As it stands, I have Fios data at $40/month and satellite at $70/month.

(and no VZ phone number. I use a voip service for phone. sorry, VoiceWing is $10/month more than my 'perfectly fine' voip home phone from someone else. However, if they threw in Voip for $14.99/month, VZ would have my Voice business back as well!)

VZ, my Video/Data/Voice business is YOURS to have! Come and get it!

Show me a bundle where Fios TV comes in at $50/month (for enh. basic+HBO+2 dvr's) and I'm signing up, otherwise I am completely happy with my satellite service TV at the same price, minus $5 bucks. Which equals $60 bucks per year.
DCITDave 12/5/2012 | 4:06:03 AM
re: Verizon Steps Up Franchise Fight Brilliant post, chip.

I've long suspected they weren't actually saving folks money, just mailing fewer bills.

I wonder if there are other FiOS subs that will come forward and say that, while they love their service, they are paying more, not less, for the privilege.

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