Internet, phone and cable prices set to drop

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Charter and Verizon look ready to invade each other’s Malibu turf, with lower rates and better service as the weapons.

By Hans Laetz / Special to The Malibu Times

Malibu residents may have heard this before, but it appears the fruits of deregulation and the fiber-optic revolution may finally be ripening here.

The local telephone and cable franchises are poised to invade each other’s turf. Telephone company Verizon wants to offer cable TV and high-speed Internet to Malibu residences, and cable company Charter Communications is planning a local telephone service to undercut Verizon. Both companies plan a Malibu-wide rollout in 2006.

In cities where the two companies are going head-to-head, overall bills have dropped as much as 50 percent, with an increase in services.

Of course, longtime Malibu residents have heard this before. Twelve years ago, Verizon (then GTE) announced plans to overbuild the cable company (then Falcon) with an advanced, two-way cable system called Americast. It never happened.

The difference this time is that the networks are actually built or in construction, and Charter has already begun slashing prices.

“Verizon is still at the table, applying for a city franchise,” said city telecommunications specialist Jena Chanel. “But it looks quite good for competition.”

“I think Malibu is going to be a very interesting place to do business,” predicted Charter’s Craig Watson, vice president for communications for the Western United States. “Being very competitive price-wise is absolutely a part of our business plan.”

“You bet that Charter had to lower their rates in Texas when FiOS was offered,” said Verizon West Coast spokesman Jonathon Davies.

The two companies face head-to-head competition in the Dallas suburb of Keller, Texas, where Verizon this year rolled out its first cable TV/Internet/phone service, called FiOS, which uses fiber-optic lines that go all the way into each customer’s house. Charter has lost half of its Keller cable customers to the phone company, and has slashed its rates to compete.

How much?

Try $50 a month for a combined digital cable TV package with high-speed Internet service, according to trade papers. That’s less than what most customers in Malibu pay for cable only.

Charter is already tempting new customers with high-speed Internet at the price of $20 per month for a half year, with no contract.

Charter has also rolled out telephone service over its cable networks in the San Bernardino and Riverside area, undercutting the traditional “plain old telephone service” rate by 10 to 20 percent.

Verizon is behind Charter, which already has its network in place through the entire city. The phone company has installed fiber lines only from Bluffs Park to the east, and for now is limited to offering high-speed Internet services to those customers. Davies said fiber optics will be installed in the remaining 60 percent of the city by this summer, and cable TV services will be turned on as soon as Verizon obtains a franchise from the city of Malibu.

Chanel said negotiations are going smoothly, and that Verizon promises to pick up its share of costs and distribute Malibu’s government Channel 3.

But what Verizon lacks in existing infrastructure will more than be made up in what it can deliver: download speeds in excess of 30 megabits per second-far in excess of T3 lines or other state-of-the-art transmission schemes.

Both companies have long roots here, which longtime residents might remember. Verizon is the successor to General Telephone, which built the local phone exchanges in the 1950s. Charter is the corporate successor to Falcon Cablevision, which strung coaxial cables for local TV service in the early 1960s.

Both companies had reputations for being technologically inferior monopolies, and both companies have spent millions to upgrade their copper lines beginning in the 1980s. Now, Charter has the lead in building a fiber optic network that, for several years, has connected every Malibu neighborhood to its head-end, with coaxial wires delivering high-speed Internet and cable television from distribution boxes into homes.

Charter’s Watson said that the network of fiber optics into every neighborhood is being put to use today to deliver the most technically advanced cable lineup in the country, including Moxi, a sophisticated video program search and management system developed by Microsoft founder Paul Allen, who owns much of Charter.

But Verizon plans a new system that will run fiber optics to every house, a much wider data highway that can cut costs and eliminate bottlenecks that plague even Charter’s high-speed network, Davies said. Verizon will be able to use the “fat pipes” to deliver HDTV broadcasts that industry analysts say look better than Charter’s.

Charter has to compress all 22 local Los Angeles digital TV stations to fit them on the coaxial cable wire that runs to each house, and giant new TVs will show the difference caused by compression.

“Side by side, FiOS is clearly superior in delivering high-definition TV,” said Verizon’s Davies. “It’s all about bits, and we can move more bits.”

Charter’s Watson said the difference between the two pictures is negligible: “Our competition for TV right now is satellites, and our pictures are eye-poppingly superb.”

A test in Texas by a national trade journal gave the edge to Verizon’s FiOS, which it said was noticeably better.

All of this should be considered by anyone buying an HDTV, or considering high-speed Internet, spokesmen for both companies said. Although more than 20 million HDTV sets have been sold in America, fewer than half of them are actually hooked up to view broadcasts in actual high definition, but instead are used for stretched-out standard definition TV signals, video games or DVDs.

Although both companies are investing heavily in the new high-speed Internet service, neither said they were bothered by some cities that are starting free citywide WiFi networks. West Hollywood just announced that anyone with a laptop and WiFi card can use the Internet along Santa Monica Boulevard now, and citywide soon.

“We don’t think a municipality should be in competition with a private company for that service,” said Charter’s Watson. “That said, we are part of the backbone being used for citywide WiFi in some of our service cities, and we can partner with agencies seeking to provide this service.”