A new state law gives TV viewers more options.
Competition between telephone companies and cable TV operators is heating up as a new law allows both kinds of companies to more easily compete for TV viewers. Companies no longer have to negotiate city by city or county by county for a local franchise agreement to provide cable and video services. Now, the firms can simply pay $10,035 to the state for a franchise certificate allowing them to do business where they want.
The state-issued certificate allows Verizon to make FiOS available to another 77,000 households — on top of the half a million homes already wired for FiOS. Ultimately, Verizon plans to invest another $500 million to build out its FiOS network to reach 1.5 million Floridians by the end of 2010.
BellSouth, now part of AT&T, spent more than $1 million lobbying for the new law. It says it will seek a state franchise certificate to introduce an internet protocol-based network, which it calls “U-verse,” in south Florida. U-verse bundles television, telephone and internet access service to consumers over a fiber optic network similar to DSL. “We’re still in the process of analyzing our network and where that rollout will occur,” says BellSouth spokesman Don Sadler.
Cable providers, meanwhile, are weighing their options. Steve Wilkerson, president of the Florida Cable Telecommunications Association, says the new law allows cable operators to terminate franchise agreements in areas where competitors get a state certificate and step in. In those cases, he says, most cable operators are likely to seek their own state certificates to continue operating if they feel their competitor has an unfair advantage. However, once existing franchise agreements between cable TV providers and localities expire, they will be required to renew their operating certificates through the state.
Even before the new law passed, Florida consumers were enjoying some benefits of competition. Bright House Networks, a cable operator that’s a subsidiary of Time Warner, had responded to Verizon’s aggressive push into Tampa Bay by offering discounts and new services to customers tempted by FiOS. Last fall, for example, Bright House launched a product for home-based small and midsized businesses that incorporates services such as user-level security and automatic remote backup.
Bill Newton, executive director of the Florida Consumer Action Network, says competition may bring lower prices and some additional services to consumers, but he wonders whether all will benefit equally. Unlike the old cable franchise agreements, the new law doesn’t require companies providing cable TV service to wire the entire community. And customers will now have to direct any complaints about service to the Florida Department of Agriculture and Consumer Services rather than their local government. Newton worries that new TV providers will cherry-pick locations, catering only to wealthy neighborhoods. “We’re certainly going to be watching to see whether it gets rolled out equally in all areas. We’re concerned about the digital divide.”