Video Franchise Battles – First Local, Then National

It is time to add coverage of the hyper local problems of broadband, video franchising, and other issues such as problems faced by municipalities. Patrick Hynes focuses on the battle between Cablevision and Verizon in the New York’s Long Island region. And if somewhere along the way, we find a success story, brilliant. Since I cannot be everywhere, it would need some help from the readers/community. If you are a citizen reporter, and can shed light to the issues involved, drop me a line, or a link. Any suggestions on how best to track it all would be welcome. – Om

By Patrick Hynes

While America loves an underdog, there is no real underdog in the telcos v. cable battles raging across the country and in Washington, DC. Nevertheless, it is hard not to cheer for the telcos. The cable companies have so abused their position in the market place over the years, many Americans are just fed up. I have likened the battle to a political campaign. The cable companies represent the incumbent and the telcos represent the challenger, albeit a well-funded one. In New York, the incumbent is getting nasty. Cablevision launched an aggressive, some would say dirty, campaign to keep Verizon out of Hempstead, a Long Island community of over 700,000 residents. Consistent with my political analogy, this battle featured a much-publicized negative ad.

Cablevision helped finance a television ad and a direct mail campaign that cleverly hinted that Verizon had “red lined” the map of Hempstead while deploying its FiOS product. (Cablevision didn’t actually say Verizon “red lined” for that would have been a crime.) In an editorial, Newsday said the smear campaign was” poisoning the debate” and the maps submitted to the city by Verizon “gutted their argument.” In the end, the city of Hempstead granted Verizon a franchise to compete for customers. As consultant Jeff Kagan told The New York Times:

What’s happening there in New York is an early curve of what’s going to be happening around the country in the next few years. … This is a new wave of competition. Basically the telephone and cable television companies are both rushing to offer the same bundle of services: television, phone, Internet and wireless. The sooner they do, the sooner prices will come down for all the customers.

And prices have already come down in the few California communities that have opened the door to video competition. University of California Professor Yale Braunstein released a study earlier this month in which he found “prices in the California cable TV market dropped 15 to 22 percent when the Cable giants competed with wireline paid- TV providers such as Verizon and AT&T.” The study was financed by AT&T, it should be noted, so take it with a pinch of salt.
The traveling road show now heads to New Jersey. Meanwhile, Verizon continues to lay fiber in Massachusetts, Maryland, and Pennsylvania.

What’s the end game? These local battles seem to be the proving ground for the war in Congress over national franchising. There is a mark up on the national franchise bill which risks being stymied by otherwise ancillary issues. These aren’t irrelevant or inconsequential concerns. But it is time Congress thinks about the consumers for once, and not the big industry players.

Patrick Hynes is a freelance writer from New Hampshire. He runs the blog the Channel changer