The phone companies’ plans to roll out video services across the nation have been slowed by the need to negotiate individual contracts with most municipalities. AT&T for instance, hit a wall in talks with the Chicago suburb of Roselle, owing to the fact that AT&T neglected to mention that the new lines it wanted to lay would carry video. (AT&T has insisted that its new IPTV service is wholly different from cable television and forms a data service, not a video network.) Now Verizon has run into trouble of its own as it attempts to bring its fiber-optic FiOS service to Montgomery County, Maryland.
The county, located just outside of Washington, DC, has apparently demanded that Verizon reimburse county lawyers and consultants for their time spent on negotiations. This, among other issues, did not sit well with Verizon, which decided to drag the county to court. They plan to argue that the local government’s actions violate federal law. For their part, the county argues that Verizon simply won’t play by long-established rules that govern the cable industry. Chief Administrative Officer Bruce Romer said that the lawsuit “is evidence that Verizon is unwilling to play by the same rules that apply to their cable competitors.”
Verizon and AT&T are newcomers to the world of municipal video franchising, and both appear frustrated by the tedious nature of the negotiations. Imagine having to secure deals with every municipality or county across the nation in which you want to introduce a new video service. Not a pretty picture, is it? On the other hand, municipalities don’t want to sign away valuable access to rights-of-way without a little something in return (Montgomery County, for instance, wanted Verizon to set aside 65 channels for local public access programming).
The telecommunications companies aren’t opposed to sharing the money, exactly, but they don’t want different regulations and contracts in every county. AT&T’s strategy has been to offer municipalities a “memorandum of understanding” that guarantees them five percent of local revenues with no room for negotiation (Roselle did not like this approach). The companies would far prefer to negotiate at the state or federal level and secure uniform franchising agreements.
That wish may be coming true, as recent legislation looks ready to take the matter out of the hands of local authorities. While this approach will mean that cities have fewer options for regulating and negotiating with the telcos, it does mean that the companies can roll out their technology much faster and at lower cost. Whether this ultimately benefits consumers remains to be seen, but it’s not a bad idea in theory.
When IPTV and other new services are at last deployed, the challenge is convincing people to buy them. While cable television is a well-understood technology, IPTV is not. AT&T has taken the unusual step of previewing its service for small groups of consumers in San Antonio, where its U-verse IPTV system first launched. This approach, dubbed “Selling TV like Tupperware” by the Wall Street Journal, tries to convince customers to switch by inviting them into an upscale house and showing them side-by-side televisions, one with IPTV, the other with cable. The company is also seeking out neighborhood leaders who will host similar “TV parties” in their own homes.