Verizon & New York: A perfect match? Maybe so

by Jim O'Neill

Verizon’s push into New York City has been creating a buzz on the street for months, but just how bad the telco wants to lay down its FiOS network and do battle with incumbent cable heavyweights Time Warner and Cablevision becomes clear if you take a look at the deal NYC’s Franchise and Concession Review Commission signed off on this week (the state Public Service Commission has to do the final OK).

The agreement was crafted over the past 18 months in quiet negotiations and sailed though the FCRC in just four days after a pretty uneventful public hearing. The speed with which New York agreed to the plan shouldn’t be surprising, either. Here’s why:

Verizon has promised the city it would have 100 percent of the five boroughs connected by June 30, 2014. (By the way, if you’re a Staten Islander, you can expect to hooked up, like, NOW. Verizon says SI will have 100 percent connectivity by the end of 2009.) As expected, Manhattan will get the most attention. Verizon says it already reaches 57 percent of the Big Apple and says it will have FiOS to about three-quarters of homes, MDUs and businesses by the end of 2011. The downside? No real performance penalties to keep Verizon in check. Miss a deadline, ah, well. And, despite promises to not discriminate against poorer neighborhoods, Verizon basically gets to lay down fiber where it decides to. Park Place, anyone?

But, Verizon isn’t skimping on its estimated $6 billion build out—FTTP will be deployed throughout the city (OK, I’m really waiting to see how they do that in some rougher neighborhoods; Brooklyn, the Bronx and Queens deploy a lot slower than Manhattan and SI). But in the end, New York should have a true 21st Century network.

The company isn’t asking for—and the city isn’t offering—a dime in subsidies. That’s a change from other municipalities looking to attract broadband build out and it flies in the face of FCC chief Kevin Martin’s pronouncements yesterday that he backs subsidies for network construction. Subsidies? We don’t need no stinkin’ subsidies. Verizon says it will recoup its investment through fees to subscribers (and, yes, that sounds a bit ominous if you’re looking forward to using FiOS, perhaps, but scale and existing competition should serve to contain prices a bit). For Verizon, it’s an opportunity to build a network it won’t ever have to share or bid on ever again—a potential bottomless ATM machine. Once there, it’s done: Full access to the largest cable market in the nation.

Despite some potential inequities, it’s a great deal for New York. The city is picking up its full-boat franchise fee: 5 percent of gross revenue, and—once Verizon completes its citywide networks--residents actually get a choice. Granted a duopoly doesn’t offer a huge choice, but it is better than a monopoly. --Jim

P.S. Have you heard? FierceVoIP and FierceTelecom are hosting a party at NXTcomm on June 17 in Las Vegas, and we want you to be there.