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Utopia Theater: Money Isn't Everything

Voom shut down for good on April 30, 2005. It was sad to watch the promise of an HDTV-based satellite system with almost 40 HD channels, including a lineup of stations unique to Voom, go dark. Ten of those channels should be available on Dish Network by the time you read this, which isn't surprising—EchoStar, Dish Network's parent company, recently bought the Voom satellite and other assets.


The loss of Voom was a defeat for the visionary Charles Dolan, and a victory for many on Wall Street—the same crowd that decried HDTV right from the get go. Viewed in that context, it's a minor setback in the long—and now we can say with confidence—successful march to give consumers the biggest advance in picture quality since color. Really, it's a miracle that our side is winning, given the firepower arrayed against us.


In an article about the Voom shutdown, Wall Street Journal reporter Peter Grant wrote that Voom failed because HDTV wasn't "a big enough draw." Nonsense. Voom failed because it was launched ahead of its time, well before the customer base had formed. Not only that, it was poorly marketed, and the plug was pulled just when it had a genuine chance to succeed. David Sarnoff waited 20 years for color TV's success; Voom was killed in less than two. Given the opportunity, many on Wall Street would have pulled the plug on HDTV before it was even plugged in.


Despite the Voom setback, the HD future looks bright for many reasons. DirecTV just launched the first of four new satellites, allowing them to spot-broadcast 1500 local HD channels and 150 national HD channels. That will spur the cable companies to increase HD programming as well. Even more importantly, new players are entering the programming marketplace, which will only increase competition even further.


Telecoms, hit hard by cable's entrance into broadband Internet and telephone service, are fighting back by offering television programming. Some telecoms have forged alliances with satellite providers, while others, like Verizon, are starting from scratch. DirecTV sees this trend as a way to counter their inability to offer packages that combine broadband Internet and TV programming with which cable's been so successful over the past few years. Companies like Verizon see convergence as the business model necessary for their future survival in the face of cable's multi-faceted attack on their core Internet and phone services.


Verizon began laying the foundation for this sweeping change a few years ago, with a huge investment in fiber-optic infrastructure, running it on the same poles used by the cable systems. Fearing the courts would rule that they would have to share the fiber-optic network with competing companies as it was forced to do with the old copper lines, Verizon delayed using the new network until a recent Supreme Court ruling (Verizon v Trinko), which said the Telecommunications Act of 1996 did not expand the scope of antitrust laws, and Verizon's failure to allow competitors to use the new network did not violate the law.


That accomplished, Verizon began rolling out its new fiber optic system (generically called Fiber to the Premises, or FTTP) in select areas, including the town where I live. At first, only broadband Internet service will be available, but get this: for around $45 a month, you can get a download speed of 5Mbps, and 30Mbps is not much more. That's awesome, and especially useful for people who do video production or host a Web site, which is what I do from home. Verizon runs the fiber line from the street to a fiber-optic terminal box outside the house that will eventually deliver both Internet and HDTV.


As reported in The Wall Street Journal, the new video service, called Verizon FiOS TV, is busy planning its TV programming lineup. Just the other day, I received an announcement regarding Verizon's deal with Showtime Networks. The new service will offer Showtime, The Movie Channel, Flix, plus HD and video-on-demand programming.


Given that my current DSL provider, Speakeasy, leases Verizon's old, slow copper wires and charges me more than $80 a month for glacial service (compared to fiber optics), you'd think I'd jump at the chance to switch to the new fiber optic network. But I haven't. Why? For one thing, Speakeasy provides great customer service. Have a problem? DSL goes down? They are always there to help, and they are always "manicuring" the system to keep the speeds high—higher, in fact, than they promise to give you. Meanwhile, friends with the old Verizon DSL over the same copper lines constantly complain about how slow it is.


But that alone would not be enough to keep me paying twice as much for a slower connection. Tempted as I was by Verizon's new fiber-optic service, what stopped me from pulling the trigger was a friend's recent experience with Verizon. He had canceled a credit card, forgetting that the automatic monthly payments for his Verizon DSL service were charged to that card. When the credit-card company rejected the charge, did Verizon's system spit out a warning email to my friend about the unpaid bill as Speakeasy would have? No. It just shut him down cold. It took him a while to figure out what had happened, which was bad enough. But what was worse, Verizon took almost a full week to reinstate his DSL service and get him back on line.


I can't afford to be down for a week. But I also can't see spending twice as much with Speakeasy, so I called them, and they bowed to the pressure of competition and cut my rate to the point where it is now competitive with Verizon's. The speed isn't nearly as high, but the superior customer service I get from the nice people at Speakeasy more than makes up for the speed differential.


It galls me to think of Verizon's CEO Ivan Seidenberg hauling in about $20 million a year running a company that cuts customers off immediately, no questions asked, when a $40 bill that had been paid every month on time, suddenly isn't paid for one month. As I wrote to a public-relations person at Verizon, explaining why I wasn't trying the new service, "I don't do business with pricks."

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