Verizon Calls For Telecom Reform

The rules should to be changed so telecoms can better compete with cable operators, CEO Ivan Seidenberg said at a trade show today.

By Jim Wagner | Posted Jun 7, 2005
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CHICAGO -- Rules are getting in the way of Verizon's plans to package and rollout broadband fiber services, the company's chief said Tuesday.

Verizon, the largest telecom in the U.S., is pursuing an ambitious plan to pipe fiber into nearly 3 million homes by year's end. The company already announced it would deliver an interactive TV service, Fios TV, which features programming that's similar to cable as well as tiered content like family, sports and HDTV packages.

But before that can happen around the U.S., the federal government needs to adjust the regulations governing franchising in local communities and enforce laws to protect copyright owners, Verizon CEO Ivan Seidenberg told attendees at the SUPERCOMM 2005 telecom trade show here.

Seidenberg emphasized the current franchising laws in the U.S. that require video providers to sign agreements with individual communities before they can provide television services.

Of course, he said, the cable industry would love for Verizon and others to have to use the same process to provide TV services as well as throw obstacles in their path to convince regulators to keep the franchising rules in place.

"The cable companies see us as an insurgent in their market," he said. "Whether they thinks it's right or wrong for us to enter, it's in their interest to slow us down."

Carriers aren't looking to avoid paying franchising fees, Seidenberg said, but the barrier to entry isn't something the cable industry has to worry about as it ramps up VoIP telephony services.

Where the telephone carriers have been looking to enter the lucrative TV services arena, cable companies have been rolling out services to expand their traditional customer base.

Cable VoIP has gone beyond the trial phase in select communities to bigger-market tests. In 2004, cable companies had nearly a half-million users signed up to the telephony service, a 900 percent jump from the previous year, according to Infonetics Research.

Comcast announced this year it would market Digital Voice, with unlimited U.S. calling, to 15 million homes this year; officials from the company have set a goal of 8 million subscribers to the service by 2010.

In comparison, Verizon officials fear the telecom industry will spend years trying to secure deals with local communities before they can sign up their own customers.

"What we're looking for is parity of entry of two industries that are becoming insurgents in the other industry," he said.

Telecoms are trying to throw roadblocks of their own to break up the cable operator's hold on the industry. One of them is through the Supreme Court, which is expected to decide later this year in the Brand X case, whether cable operators should be classified as an information service.

If the highest court rules cable operators provide a telephony service, they should be required to open up their networks to allow competitors, critics maintain. Former Federal Communications Commission (FCC) Chairman Michael Powell, when his 2002 ruling that cable is an information service was overturned by the 9th Circuit Court of Appeals, said, "high-speed Internet connections are not telephones."

Seidenberg also believes legislation should be passed to protect copyright owners, to give them an incentive to put their content online. Content providers have been reluctant to adopt mainstream, online-based, services of their music, movies and other content for fear it would be pirated on peer-to-peer networks, he said.

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