Verizon enters R.I. cable market
01:00 AM EDT on Wednesday, May 23, 2007
By Timothy C. Barmann, Journal Staff Writer
Verizon Communications has received final approval to launch its cable television service in several West Bay communities, marking the first time a new company has entered the Rhode Island cable market in more than 20 years.
Verizon’s entry will usher in a new era for cable customers in Rhode Island, most of whom have had only one company to choose from since cable first came to the state in the early 1980s.
The approval, granted by the state’s Division of Public Utilities and Carriers on Monday, follows a 14-month review of Verizon’s application. The state permission allows Verizon to turn on its service as early as June 5, but a company spokesman said that Verizon has not announced when service will begin, beyond saying it will be sometime in June.
Verizon’s move into the cable television business in Rhode Island is part of a national strategy to find a new source of revenue to replace the dramatic decline it has seen in its traditional telephone business. Analysts have described the cable strategy as risky because of how much Verizon will spend to upgrade its infrastructure. Verizon, which calls the service FiOS TV, is providing cable TV, high-speed Internet access and telephone service over fiber-optic lines that connect directly to a customer’s home. The company expects to spend $23 billion to upgrade its network through 2010.
In Massachusetts, Verizon has already been granted cable franchises in 47 communities and is negotiating with some 20 others. The company also offers FiOS TV in California, Delaware, Florida, Maryland, New Jersey, New York, Pennsylvania, Texas and Virginia.
In Rhode Island, Verizon has already rebuilt more than 70 percent of its network in the area where it will first offer cable service, according to filings made to state regulators.
The company has not yet announced the pricing for the FiOS service. But a Verizon spokesman said it will likely mirror rates in Massachusetts, where the expanded basic tier is $42.99 a month.
“When we launch FiOS TV next month, it’s going to knock the socks off consumers when they see the quality of the all-fiber-based picture, the impressive channel lineup and the number of [high definition] channels and on-demand titles,” said Donna Cupelo, president of Verizon’s operations in Rhode Island and Massachusetts, in a statement.
The competition is Cox Communications, which has been the dominant cable provider in Rhode Island for several years. The company provides service to 98 percent of the state’s 315,000 cable customers, according to the DPUC. The only other provider is Full Channel Cable TV of Warren, which serves 6,900 customers in Bristol, Barrington and Warren.
Verizon also goes up against the direct-broadcast satellite providers, though the subscriber base is relatively low in Rhode Island compared with the national average. There were about 44,800 satellite customers in Rhode Island as of October 2005, according to The Bridge Media Group, an independent media research and consulting firm in Golden, Colo. That was about 9.9 percent of all television households in the state, among the lowest penetration rates in the country. (Nationally, about 1 in 5 households subscribe to satellite service.)
“When you have companies that are offering like products at similar prices, what it comes down to is customer service,” said Leigh Ann Woisard, a spokeswoman for Cox. “We think we set a high standard that we think is going to be tough for Verizon to meet.”
For now, Verizon may only offer the service in Service Area 6, which includes 79,600 households in Coventry, East Greenwich, Exeter, North Kingstown, Warwick, West Warwick and West Greenwich.
The company has also applied for licenses to serve Service Areas 2, 3 and 8, which include 158,000 households in Charlestown, Cranston, Foster, Hopkinton, Johnston, Narragansett, North Providence, Providence, Richmond, Scituate, South Kingstown and Westerly. The last scheduled public hearing for those applications is set for June 7. The company could get final approval for the three areas as soon as this fall, said Eric Palazzo, the DPUC’s associate administrator for cable television.
“The division is excited that we’re going to have land-line cable competition in the state,” Palazzo said in a telephone interview yesterday. “We look forward to it having an impact on subscribers’ rates, subscribers’ customer service and the volume, quality and number of channels that are currently provided.”
Palazzo said he also expects Verizon’s entry to bring about four-product package deals for customers, known in the industry as the “quad-play.” These packages offer a discount to customers who subscribe to cable, Internet, telephone and wireless phone service from the same company.
Verizon does not yet have a quad-play package, said Phil Santoro, a spokesman for Verizon. But he said the company is planning to introduce one.
Verizon does offer a three-product package for its customers in Massachusetts: cable television, Internet service and land-line telephone service with unlimited local and long distance calling at a promotional price of $99 a month, good for two years. (The regular price is now about $128 per month.) Cox now offers a similar package for $99.
Woisard, the Cox spokeswoman, said that company is also planning to offer a four-product package that will include wireless service from Sprint. She said that deal will probably be announced this summer.
tbarmann@projo.com |
