Verizon nips at heels of ComcastCable customers could see more competition soon
By Rona Marech and Larry Carson Baltimore Sun
reporters January 5, 2006
Cherise Tasker is less than enamored with her cable television provider.
When she calls with a problem, she said, she often is placed on hold for more than half an hour. For months, certain channels have flickered at random from color to black-and-white, and the sound and moving mouths haven't matched. For these indignities along with Internet services, she pays her cable company nearly $125 a month.
"They say they don't know what's causing the problem and they don't know when they can fix it," said Tasker, 41, a Columbia resident. "I think we sorely need the competition."
For consumers such as Tasker, who are frustrated with their cable providers and believe a solution lies in free enterprise, help could be on the way.
The Verizon cable television franchise approved in Howard County on Tuesday night is likely just the first of many incursions into cable company Comcast's reign in Maryland, where it is now in 16 of 24 jurisdictions. Verizon also is preparing to venture into Anne Arundel, Montgomery and Prince George's counties.
The move comes as telephone, cable and Internet services are rapidly evolving and converging.
Internet companies now offer telephone services. Television-like clips can be downloaded onto cell phones. Last month, Comcast officially launched its telephone service in suburban Maryland. Now Verizon has countered in Howard and other counties. Talks between the company and Baltimore County are pending.
"I've heard from many constituents about, 'When are we going to have a choice, and when is there going to be competition here in the county over the choice of cable?' I think that day is at the doorstep," said Baltimore County Councilman Joseph Bartenfelder, a Democrat representing Fullerton.
Companies providing cable service are required to get a franchise agreement from local or state governments, which critics say is tedious and expensive and discourages competition. Some states, including Texas and Indiana, have passed or introduced legislation to streamline the process. Verizon will not seek such statewide legislation in Maryland this year, but the company is backing similar federal legislation in Congress, said spokesman Harry J. Mitchell.
Parts of some counties, including Anne Arundel and Harford, already have limited cable choice but less than 4 percent of jurisdictions nationwide have effective competition, said Dean Smits, Howard's cable administrator. Despite Comcast's claim to the contrary, federal studies have shown that satellite video competition has a negligible impact on rates, he said.
Advocates say the argument for diversification is simple and obvious.
"We think competition is the way to improve rates, services and program offerings," said Cheryl Reed, of Consumers for Cable Choice, an organization supported partly by telecommunications companies including SBC and Verizon. The group's members include representatives for small business owners, rural customers lacking access to cable and minorities seeking more diverse programming.
Reed said cable rates went down 25 percent in Keller, Texas, when competition came to town. However, Anne Arundel cable customers who have a choice between Comcast and Millennium Digital Media have seen prices dip only by $3 or $4 a month, said John Lyons, the county's cable administrator. Nonetheless, the competing companies offer temporary price cuts and extra services to entice customers, he said.
Because Verizon is offering a fairly expensive, high-end cable service, its foray into television helps only the "very upscale part of the market," said Mark Cooper, director of research at the Consumer Federation of America, in Washington. Consumers who are using a big package of telephone and Internet services could receive a moderate discount off their current prices, but others might not see a difference, he said.
Verizon is spending a lot of money to install fiber for this new service and must gain a large market share to be successful, Cooper said.
"In order to make this work, they have to invent new things to sell and new revenue streams," Cooper said. "Frankly, the telephone companies have never been very good at that."
Comcast, meanwhile, is trying to fend off the competition by developing new communications services and stressing the firm's long-established system.
"We have built the infrastructure and developed the features and products our customers have asked for," including video-on-demand, said Comcast spokesman Jim Gordon.
"The trends in viewership and media consumption are completely changing. It's very exciting."
Technological convergence could be felt soon in living rooms across America. Experts say consumers will be able to download movies faster. They might be able to set a digital video recorder from the office, or when the phone rings they might be able to see the caller's name on their television screen. All in the same home, one person could watch a movie over the Internet while another simultaneously downloads a different movie and another has a teleconference or talks on the phone over the Internet.
If competition is the key to ushering in such advances, as some critics suggest, it could take a while to get there. Though Verizon is moving forward in Howard County and elsewhere, the company has encountered some problems getting started.
In Baltimore City, difficulty in getting cable to high-rise buildings has delayed progress, Mitchell said. The city, which has a nonexclusive contract with Comcast, would welcome competition but has not been approached, said Marilyn Harris Davis, executive director of the Mayor's Office of Cable and Communications.
In Baltimore County, where the County Council regulates cable services, another roadblock looms. Baltimore County Councilman Kevin Kamenetz said he has invited Verizon to begin talks there, but he is insisting the firm have a completed franchise agreement before starting installation of new fiber-optic cable.
In the other counties, Verizon has begun installing cable, which also serves the telephone and computer services Verizon is federally licensed to provide.
"If their purpose is to provide cable service, they have to have an agreement first. All we're trying to do is treat everyone equally," Kamenetz said.
Under Comcast's agreement with Baltimore County, the company pays for the County Council's Web site and provides free Internet service to all senior centers, libraries and public schools. In addition to receiving a franchise fee, Baltimore County saves $1 million each year by using Comcast-installed Internet fiber-optic cable for computer transmissions, Kamenetz said.
Despite all that, "it's not our role to inhibit competition," he said. "As long as services are being provided on an equal basis - come and see us."
In Howard County, Verizon is expected to begin offering services in April. But Tasker, the aggrieved Comcast customer, might not have to wait that long for improved services. Asked to respond to her complaints, Comcast spokesman Gordon said the company's chief engineer was already looking into the problem.http://www.baltimoresun.com/entertai...al-artslife-tv