Verizon vs. New Jersey

Filed in archive IPTV on June 18, 2005

Verizon and SBC have suffered some legal setbacks recently in their quest to implement IPTV as an alternative to cable television.

In an article entitled "Verizon Will Try New Strategy To Advance Its Television Plans," the Wall Street Journal explains that Verizon is now seeking a state-wide carriage solution in New Jersey. It is offering to pay the state's municipalities higher franchise fees in exchange for statewide approval. Verizon is the largest phone company in New Jersey.

[Some] "New Jersey lawmakers ... [will] introduce Verizon-backed legislation this year. Under the proposal, a company seeking to offer TV service would need approval just from the state Board of Public Utilities. Companies getting statewide approval would pay municipalities higher fees ... 3% of annual television revenues, rather than 2%."

Verizon failed to get similar measures in Texas and Virginia passed. Neither of those attempts had the fee increase in them. Verizon officials say they have incorporated lessons from those defeats.

Now, this is what I don't understand about the Telcos' business strategy: why would you pump billions of dollars in infrastructure upgrades, announce that you were going to be in the television business, and only then wake up to the regulatory game? I have never known a local governmental body that wants to voluntarily reqlinquish either power or authority. Also, the cable companies have every reason in the world to hamstring a new entrant with the same regulations that they have suffered through for decades.

So, why did Verizon think they could just waltz in and offer television service with no hastles again? It seems to me that while they are in the early stages of defining their competitiveevision offering, they had better get smarter business executives in place in their IPTV division and pronto.