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Alternative for TV service is on the way

Sometimes, the most interesting news isn't what's happening now, but rather what might be coming.

That's the case with last week's announcement that Verizon Communications will start stringing fiber-optic cables to homes and businesses in Hamburg and Orchard Park.

The immediate effect of that upgrade is that Verizon will be able to start offering even faster high-speed Internet connections in those Southtowns communities. Significant, but not startling.

The really interesting part, though, is what Verizon's move might mean in a year or two or three. That's because those fiber-optic cables mean that Verizon will be set up to offer television service in those communities, bringing a formidable new competitor for cable television and satellite TV providers.

How formidable? Verizon currently offers television service in only one New York community -- the Long Island village of Massapequa Park -- and subscribers there can buy a package of 180 video and music channels for $39.95 a month. That would undercut the ever-rising rates charged by Adelphia Communications here and give satellite providers a run for their money, too.

"We see a lot of potential for them to start competing directly with cable," said Thomas Tarapacki, Buffalo's director of telecommunications. "Consumers are really going to benefit from this."

For now, Verizon is rolling out its television service slowly in New York, with new franchises in the Rockland County villages of Nyack and South Nyack expected to come on line in the next few weeks, says spokesman Cliff Lee.

Verizon would like to move faster. But the process of winning TV franchises in every community is cumbersome, and invites intense opposition from the incumbent cable company, which already has jumped through those hoops.

In New York, state regulators have said Verizon can install its "fiber to the premises" system under its existing telephone franchise, but ruled that the company must get a cable franchise to offer television services.

Verizon, though, would love to take a shortcut by changing federal rules so it could offer TV service through a national franchise, rather than having to negotiate a separate franchise agreement with every municipality. Cable companies intensely oppose that, since they already had to work out agreements with each locality and think phone companies should have to, too.

The current franchise laws "serve mainly to delay competition and deny choice for consumers," Verizon chief executive Ivan Seidenberg said last week in testimony before the Senate Commerce Committee. He also pledged that Verizon would pay the same local franchise fees that cable operators pay and also carry public access channels.

"It benefits the consumer to have as many choices as possible," Lee says. "There's a pent-up demand among consumers for alternatives to cable TV."

Verizon's first venture into the television business in Keller, Texas, signed up 20 percent of the available customers in that market within three months, Lee says. Verizon has a statewide franchise in Texas.

Verizon is making a costly bet -- upwards of $11 billion, analysts say -- on its fiber-optic strategy as a way of offsetting its shrinking hold on its traditional phone services. By the end of 2008, Verizon hopes to have fiber running to 18 million homes, or roughly half of all households in its service territory.

Tarapacki worries that Verizon's focus on suburban areas and communities where demand for broadband services are highest might push Buffalo down on the list of municipalities to be wired.

But for consumers in Hamburg and Orchard Park, the next round of competition for TV service is just around the corner. The rest of us will have to wait just a little longer.


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