Verizon Takes On Cable and Satellite With Fiber Optic TV Service

Verizon began taking orders late last week for its FiOS fiber optic TV service, beginning a rollout that will cost the telecommunications company billions and have it competing directly with cable and satellite operators for your TV subscription dollars.

FiOS TV will provide all-digital TV service that runs over the same fiber optic lines that Verizon uses to bring phone and Internet services to its customers, allowing the telco to bundle a compelling package of services. Its initial TV offering includes over 180 music and video channels, and more than 20 HD channels. FiOS TV has nearly 600 video-on-demand titles now, and Verizon is claiming that will expand to 1,800 by the end of 2005.

FiOS TV's debut will come in Keller, Texas, some 30 miles west of Dallas. In addition to expanding to more communities in Texas, Verizon has obtained video franchises in Florida, Virginia, and California. The NY Times reports that Verizon is spending billions running fiber optic lines to customers' homes, but expects its fiber optic network to be sufficiently expanded to offer its services to three million homes by the end of the year.

As with digital cable TV a Set Top Box (STB) is required to receive the FiOS TV service and Verizon charges a monthly fee of $3.95 for the standard definition box. Two High Definition STBs are available, including one with a built-in Digital Video Recorder (DVR) for an additional charge. Basic programming packages start at $12.95 per month and go to $39.95 for expanded programming, plus additional charges for additional packages and premium channels. Video-on-demand movie charges are $2.95 for a library title and $3.95 for new releases. Pricing is expected to be consistent wherever Verizon rolls out the service and discounts will be applied for voice and data customers bundling the TV service.

Getting an idea of exactly what FiOS TV's HD channel offerings are is sketchy at this point, but a posting at the online forum of broadbandreports.com reported the Keller lineup as featuring HD feeds from local affiliates for all the major networks, as well as PBS, WB and UPN. Two ESPN HD channels were listed, along with a slew of movie channels including HBO and Showtime's HD channels, HDNet Movies, Universal HD and Cinemax HD.

This marks the expansion of a new era of competition among cable, satellite and telecommunications companies. Giant cable companies like Time Warner and Cablevision have been offering phone services to their customers in addition to TV and Internet services. Now that the telcos are following suit and entering the TV game (industry reports indicate that SBC hopes to offer its own TV services to its customers next year) it's anticipated that consumers could benefit from the kind of price wars that brought phone rates in general, and long distance rates in particular tumbling down.

Indeed, the Wall Street Journal reports that Verizon's FiOS TV for now is cheaper on a per channel basis than many cable operators and satellite systems DISH Network and DirecTV. Further, as a former customer of DirecTV's DIRECWAY satellite-based Internet access and a current customer of Verizon DSL, I can say that Verizon's DSL is significantly cheaper, and much faster in both upload and download speeds. DIRECWAY also suffers from latency issues that prohibited some Internet based services I use from working properly.

Underscoring how compelling Verizon's HD offerings are, while DirecTV's HD offerings are expected to expand, it doesn't yet offer Hd feeds from local affiliates for the major networks in all markets, nor does it currently offer HD feeds from PBS, WB or UPN. And on the premium channel front, Verizon is ahead of DirecTV in offering Cinemax, TMC and Starz! HD.

Format wars don't help anybody, but price wars on desirable services like broadband Internet and HD is something I think we can all get behind.

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