Major cable companies are offering broadband Internet access to their TV customers and have started to package voice calling into their plans, creating a “triple play” of services that have caused customer erosion among telecommunications providers.
By John Phane/ Special to The Malibu Times
A communications giant is turning the backyards of Malibu residents into the frontline of a looming battle over which company should be allowed to provide television programming in the city.
City Manager Katie Lichtig said Verizon, historically a telecommunications provider, now also wants to provide television programming. Verizon recently replaced its outdated copper cable infrastructure in Malibu with fiber optics and is now in a position to enter the market as a television programming provider.
Currently, Charter Communications, formally Falcon Cable, is the city’s sole cable source. Charter’s franchise expires in January 2006. However, Lichtig has requested that the City Council extend that franchise for a year.
The city manager said the extra months would allow the city, still operating under a franchise agreement put in place by Los Angeles County officials before city incorporation, to hammer out a deal that would benefit residents should the city continue Charter’s contract.
“For instance, the city wants a studio where original programming for public access and the city’s governmental channel can be created,” Lichtig said. She said Malibu High School would be an ideal location for such a studio. “The students would receive enormous benefit from having a studio,” she said.
However, the extension is not a guarantee the city will rubberstamp a contract with Charter.
“The council has also authorized us to also enter into discussions with Verizon,” Lichtig said.
Verizon’s attempt to enter the TV market is the end result of the competitive pressures phone companies are facing from their cable rivals. Cable companies such as Comcast, Time Warner Cable and Cox Communications are offering broadband Internet access to their TV customers and have started to package voice calling into their plans, creating a “triple play” of services that have caused customer erosion among telecommunications providers. Charter offers Internet service and uses broadband technology and, in many cases, VoIP (Voice over Internet Protocol) to offer voice service. VoIP converts your voice signal into digital pockets that travel over the broadband network instead of the phone lines.
By upgrading to fiber optics, Verizon plans to offer faster Internet access, hundreds of TV channels and calling plans. Since about 80 percent of U.S. television viewers already subscribe to some form of paid TV service such as satellite or cable, Verizon and other phone companies are working to offer services that will lure customers to their doorstep.
Internet-based TV will allow users to customize viewing through the ability to download the TV shows or movies they want, when they want. Additionally, Internet TV will allow viewers to be more interactive. For example, sports fans could select a particular camera view.
Verizon and other telephone companies are spending billions of dollars to become TV providers because they’ve admitted that selling only voice lines is a dying business.
To get their share of the pie, this year Verizon is launching its FiOS TV network, which will offer HDTV and DVR (digital video recorder) functionality on multiple TV sets. In addition to the hundreds of TV channels, its upstream speeds will give customers multimedia and interactive capabilities such as sharing family videos, video on demand, 3-D gaming and setting camera angles for sporting events.
To further compete, Verizon had inked pacts with major and independent network groups, including NBC Universal Cable, Starz Entertainment Group, Showtime Networks, Turner Broadcasting System, A&E Television Networks, Discovery Networks, SiTV and NFL Network, and is close to finalizing agreements with several other major content partners.
One major barrier Verizon and others must leap to become major players as video providers is the requirement that they obtain a second franchise from local authorities, in addition to the one the companies already have to provide phone services, to carry video on their networks. Phone company officials are crying foul over this since cable providers are not required to obtain additional sanctions in order to offer telephone and broadband services.
Lichtig confirmed that Verizon would have to obtain a city franchise in order to offer video in Malibu.