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Broadcasters alarmed by telco fiber plans

Verizon Communications and SBC Communications’ plans to wire American homes with high-speed fiber connections may encounter regulatory roadblocks in Congress, CNET reported.

Both telcos are spending billions of dollars on fiber links that can carry everything from Internet service to voice and video. Verizon’s FiOS service already boasts speeds of up to 30Mb/s with a digital TV package expected later this year. SBC’s similar Lightspeed service is supposed to be available no later than early 2006.

These forays into digital TV are alarming television broadcasters and some cable companies, which view fiber service as a competitive threat, CNET said. Verizon’s recent announcement that it plans to carry all of NBC Universal’s channels on FiOS TV was cited as a concern. Last week, Verizon signed on the 11 channels of Showtime Networks, including Showtime and The Movie Channel, for carriage on FiOS.

The emerging dispute over digital TV effectively opens up a new political front in the war between the Bells and cable companies for high-speed Internet customers.

Stations would lose audience share and advertising dollars, and these dollars fund local programming that makes broadcasting valuable, Greg Schmidt, a lawyer speaking on behalf of the NAB, said at a recent House hearing.

Congress should prohibit SBC and Verizon from offering digital TV unless the companies follow an extensive list of government regulations, Schmidt said. Among them: Local broadcasters must remain the only source for network programming; fiber providers must be required to black out the availability of certain sports games; and local TV broadcasts must be carried on fiber networks.

Rep. Rick Boucher, a Virginia Democrat, rattled off a list of possible regulatory requirements, adding privacy rules and set-top box interoperability to Schmidt’s suggestions. Other subcommittee members have suggested that indecency rules limiting off-color content should apply.

When a cable company wires a community, it must offer service to all households, Rep. Ed Markey said, so why should Verizon and SBC be permitted to select which neighborhoods are wired with fiber first?

Lea Ann Champion, SBC’s vice president for IP operations, said the company will invest $2 billion in the next year and that technological advances will permit SBC to move rapidly in offering fiber links to half of its 36 million customers.

David Cohen, a vice president at Comcast, said that in general, his company does not like to seek government favors for competitive advantages. But, Cohen warned that there are some questions about who is going to preserve the interests of localism.

One point of contention is the “franchise fee” arrangement that permits municipalities to bill companies for using their public facilities, such as light poles and sewers, to deliver TV signals. Earlier this week, Verizon CEO Ivan Seidenberg called for changes to franchise fees, saying the Bells should not be charged extra when they start serving up digital TV signals.

Robert Ingalls, head of Verizon’s retail markets group, told Congress his company is being asked to obtain a second franchise, which will delay effective video competition for years.

A broader question is whether Congress will dictate TV-over-fiber rules through legislative fiat or whether the companies involved will be left to negotiate their own arrangements.

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