Re: Verizon Cable TV?
Neal McLain
> Verizon is stringing new wires in our neighborhood and we've
> heard rumors (unconfirmed) that they're planning to introduce
> Cable TV and other services.
> I presume this is now legal due to deregulation of both cable
> and telephone industries.
It's always been legal. Every cable TV franchise agreement I've ever
seen purports to be "non-exclusive," and every LFA (local franchising
authority) I've ever encountered claims that it would like to grant
franchises to competitors.
At one time or another, at least two telcos (Ameritech and SNET) have
obtained franchises and constructed ("overbuilt") competitive cable TV
networks. Apparently, these networks weren't successful financially;
SBC's management sold them once it gained control. RCN bought some of
these networks, but it's apparently having financial problems too
as per http://bankrupt.com/rcn.txt
So why aren't there any competitive cable systems? Several reasons,
but the three most obvious:
1. Simple economics: it requires (at least) twice as much capital
to build two cable systems as one, yet the number of potential
subscribers remains the same.
2. Buried-cable construction costs: it requires substantially
*more* capital to build a second cable system today (compared
with the first system's capital cost) in any neighborhood with
buried utilities.
Sometime back in the 50s or 60s, many county and municipal
governments began mandating buried utilities in new
residential neighborhoods. Ever since then, utility companies
have been installing buried facilities in utility easements
dedicated by developers. Typically, this work has been done
right after the land surveys were completed, but before any
street, house, fence, or landscape construction was begun.
Power, telephone, and cable TV companies usually installed
their facilities in joint trenches, splitting costs three
ways. These arrangements minimized costs for all three
parties.
Now imagine the construction problems a new cable TV company
would face today. Instead of dropping its cable into an open
trench across an open field, it would have to work its way
through easements in established neighborhoods, working around
existing utilities, streets, sidewalks, signs, lawns, buried
lawn-sprinkling systems, fences, bushes, trees, gardens,
garden sheds, woodpiles, kiddie play equipment, swimming
pools, doghouses, whatever. Not to mention dogs, children,
nude sunbathers, and hostile homeowners. Even with modern
computer-controlled directional-boring equipment, much of this
work would still have to be done by hand.
3. Franchise requirements: many cable systems were originally
franchised during the Great Franchise Wars of the 70s and 80s,
when LFAs were demanding all sorts of fancy extras: color
studios, multiple access channels, I-nets, free basic service
for schools and municipal buildings, million-dollar
construction bonds (the City of Sacramento even demanded that
the cable company plant trees). By the time this process was
finished, the bidder that had agreed to the most goodies got
the franchise -- essentially an exclusive franchise in spite
of the fact that the LFA piously claimed otherwise.
The net result of all this was to drive construction costs
even higher, further inhibiting any interest from competitive
bidders. In the process, the LFAs painted themselves into a
corner: they can't relax their franchise requirements now
without inviting lawsuits from incumbent cable companies.
> Many of the neighbors are excited about this prospect. When
> cable was regulated, an intermediate-teir (sic) customer paid
> $35/month, just a few years later it's up to $50/month under
> deregulation.
I'm sure you've heard this a hundred times before, but here it is
again: the primary reason for rising prices for cable (and satellite)
service is the increase in the wholesale cost ("license fee") for
programming. To cite the extreme case, ESPN has risen 20% per year
for the past few years, and now costs well over $2.00 per sub per
month ($2.61 according to one reader's post here a year or so ago).
All of this is exacerbated by the fact that programmers can -- and do
-- bundle broadcast programming with non-broadcast programming. The
absurdly-misnamed "Cable Television Consumer Protection and
Competition Act of 1992" (and similar legislation applicable to
satellite carriers) allows programmers to force cable and satellite
companies to carry, and pay for, non-broadcast programming as a
condition for getting "retransmission consent" for the broadcast
programming. This situation was the cause of some notable squabbles
we've discussed here before: Time Warner v. Disney (ABC) and Dish
Network v. Viacom (CBS).
Even without rate deregulation, the price for your neighbor's
intermediate tier would have risen. Under the FCC's now-defunct
upper-tier cable-rate regulation formula, increases in programming
costs were "external costs" which could be passed through to
subscribers [47 CFR 76.922(d)(3)(i) and 76.922(f)(1)(v)].
> The cable company is very profitable.
I suspect that some of their stockholders might not agree. Especially
Paul Allen.
> Anyone have any experience with Verizon cable TV or other
> new services?
Verizon and SBC are building FTTP networks, not conventional cable TV
networks. According to this month's FiberOptic Product News, "The
lowest data streams Verizon will deliver are 5 Mbits/sec downstream
and 2 Mbits/sec upstream" (Bob Pease, "The Windy City Fills The Sails
of Those Attending Supercomm," FiberOptic Product News 19:8, August
2004, p.4).
Verizon and SBC will certainly be able to deliver cable-TV-like video
these networks, but they must have a lot more in mind than just "cable
TV" in order to justify the construction costs. Several obvious
applications come to mind: high-speed internet access, VoIP telephony,
HDTV PPV, real-time full-motion videoconferencing, high-speed virtual
private data networks.
But I rather doubt that even Verizon and SBC will be able to get video
programming any cheaper than Comcast or Time Warner can. Especially
from Disney.
Neal McLain
nmc...@annsgarden.com
Tony P.
says:
> In <telecom...@telecom-digest.org> hanc...@bbs.cpcn.com (Lisa
> Hancock) writes:
>> Verizon is stringing new wires in our neighborhood and we've heard
>> rumors (unconfirmed) that they're planning to introduce Cable TV and
>> other services.
> Verizon has been doing a couple of in house tests using hi capacity
> DSL circuitry to provide switched video [a], which they hope to market
> as an alternative to cable systems.
I was thinking about that very same thing the other day. What would
prevent me other than the agreement not to re-sell the cable signal I
pay for to streaming say, x number of channels of CATV via 802.11g.
There are a number of hacks for Linksys devices that let you offer VoIP
for several different subscribers, and video can be compressed down to
what, 6Mbps so at 54Mbps you'd be able to offer 9 switched channels.
Neal McLain
> Verizon has been doing a couple of in house tests using hi
> capacity DSL circuitry to provide switched video [a], which
> they hope to market as an alternative to cable systems.
Tony P. <kd...@nospamplease.verizon.reallynospam.net> responded:
> I was thinking about that very same thing the other day. What
> would prevent me other than the agreement not to re-sell the
> cable signal I pay for to streaming say, x number of channels
> of CATV via 802.11g. There are a number of hacks for Linksys
> devices that let you offer VoIP for several different
> subscribers, and video can be compressed down to what, 6Mbps
> so at 54Mbps you'd be able to offer 9 switched channels.
Well, the copyright owners would certainly object. It wouldn't take
them long to sic their lawyers onto you.
As it happens, I've been thinking about this situation too, but for
the opposite reason. Now that WFMT has lost its satellite feed, and
has reinstated its web stream (at $100/year), cable systems can't get
the signal from the satellite any more. So what would prevent a cable
system from setting up a PC in its headend and sending the streamed
signal over cable FM?
Probably the same reason: copyright owners would object. But it might
take them a bit longer to get their lawyers involved.
Danny Burstein continued:
> [a] while a cable tv system sends all the channels to your
> setup and then your tv (or converter) chooses which one to
> display, the video over DSL circuits don't have the same
> bandwidth.
> When you tune to, say, channel two on a standard cable box, the
> other 50 or 100 or whatver channels are still in your apt, but
> just not getting to your screen. When you tune to channel two
> in a video-over-dsl circuit, the server gets the instruction to
> feed that broadcast over to you. The other channels don't get
> anywhere near your home.
But a true FTTP network *would* have enough bandwidth to pass the
entire "cable TV" spectrum to your "setup." Current HFC (hybrid
fiber-cable) networks do exactly that. So why wouldn't Verizon's new
FTTP network be set up the same way?
Neal McLain
nmc...@annsgarden.com
Lisa Hancock
> Verizon has been doing a couple of in house tests using hi capacity
> DSL circuitry to provide switched video [a], which they hope to market
> as an alternative to cable systems.
The Phila Inqr (www.philly.com) had an article on this in general. It
stated that one change is that the new cabling will run fibre right to
the house, cable uses fibre to the neighborhood only, then coax to the
house (which is how cable serves my area).
The Baby Bells are looking to provide a package of TV, telephone, and
Internet. They recognize their losing traditional telephone
customers. At the same time, the big cable companies plan to
introduce telephone service over their networks.
Given the price gouging, poor reliability, and community disrespect by
the cable company, I am looking forward to Verizon's service offering.
How this will work out for the consumer in terms of quality and price
remains to be seen. It's very possible that competition will lower
cable's price, but only slightly since Verizon will want to make big
profits too and not go too far down in a price war.
Isaiah Beard
news:telecom2...@telecom-digest.org:
> Given the price gouging, poor reliability, and community disrespect
> by the cable company, I am looking forward to Verizon's service
> offering.
Funny that. Considering the poor reliability, price gouging and
community disrepect earned by Verizon, I couldn't wait to get VoIP
over a cable broadband connection and drop Verizon for good. :)
I guess it depends on where you live. Cable and telephone have both
been prevailing regulated monopolies for a long time, and depending on
where you live, one or the other is the lesser of two evils that you
must pick from. If only DBS didn't have such a horrible latency
problem, we could all drop both services.