FiOS coming soon to DC?

by on August 11, 2008 · 23 comments

After gaining final approval to rollout FiOS in New York City a few weeks ago, Verizon has come to a preliminary agreement with the District of Columbia to deploy FiOS television service in the nation’s capital. This long-awaited announcement follows nearly a year of negotiation between Verizon and D.C. franchising authorities.

Thanks to its especially onerous franchising regime, the District of Columbia has lagged behind surrounding areas in fiber-optic connectivity. Neighboring communities such as Arlington, Fairfax, and Bethesda have had FiOS for years, and D.C.’s lack of fiber-optic service has long been a sore spot for the city.

D.C. residents can’t celebrate just yet, though. Verizon must overcome one more regulatory hurdle before starting to dig up the streets. The franchise agreement must receive a green-light from both the D.C. city council and the Attorney General. If the New York City episode is any indication, getting politicians to acquiesce will involve expensive demands and forced concessions, resulting in higher prices for everyone.

As the nation’s second largest telecom, Verizon has the resources and legal know-how needed to navigate the municipal franchising process. But what about the entrepreneur who simply wants to offer service to a single neighborhood? Because of build-out requirements, revenue-sharing provisions, and other artificial entry barriers, it’s no wonder that there are so few new players in last-mile service. Getting permission to bring new television service to a community should be simple and straightforward, not costly and drawn-out.

We often hear complaints about the lack of choice in broadband and television service, but governmental attempts to enhance choice are mistakenly focused on prying open incumbent networks to let competitors leech off existing infrastructure. But as Verizon has demonstrated, what’s really needed is more infrastructure competition. Laying redundant sets of wires does have duplicative costs, but these are outweighed by the competitive benefits of greater choice. There’s room in the marketplace for multiple television and broadband providers. Last-mile service is not a natural monopoly.

Adding FiOS to the mix will bring the benefits of greater competition to D.C. subscribers. In northern Virginia, a fierce rivalry between Verizon and Comcast has pushed prices downward, even for consumers whose residences have yet to be “lit.” Cable companies have responded to FiOS with infrastructure upgrades focused on the most competitive markets. Comcast’s Blast! tier, which offers a 16mbps downstream pipe for about $50 a month, is available across Arlington and Fairfax counties, while most subscribers residing outside of the FiOS footprint can only get up to 8mbps.

Competition works, and consumers deserve more of it. Franchise reform, along with spectrum liberalization, must play an essential role in any legislative attempt to improve last-mile residential communications services in the United States.

  • Adam Thierer

    As I wrote about here a few years ago, I am lucky to live in one of the first neighborhoods that was ever wired for FIOS in Virginia and my experience so far has been great. And just last month Verizon boosted there basic tier broadband offering from 5/2 up to 10/2 at no extra charge. (I think I pay $42 per month for that entry level service). But you can get up 50/20 in my neighborhood if you want it and there’s also a symmetrical 20/20 offering (I think that’s like $60 bucks) for aggressive uploaders and aggressive online gamers. Pretty cool. But 10/2 is plenty for me right now the only thing I would need my bandwidth for is high-def movie downloads. Those big HD files can still take a few hours to download them on my Xbox 360 or Playstation 3. But I just order them overnight and they are on my hard drive in the morning.

    Verizon’s problem going forward is going to be uptake. There’s just not enough people switching over from cable right now. VZ has made a huge gamble with this sort of fixed capital investment and a lot of folks on Wall Street are wondering if they can make the math work as cable works to improve its offerings and induce customers to stick with them. It will be interesting to see how it all plays out.

  • Ryan Radia

    I still think Verizon has a real shot of prevailing in the long-run. Since fiber-optic cable can transmit a virtually limitless amount of data, Verizon has to use its comparatively high capacity to differentiate FiOS from cable. That means offering more HD channels, a wider selection of on-demand movies, and fatter Internet pipes. Even in Minneapolis, where Comcast has rolled out pre-cert DOCSIS 3.0 gear, cable’s pricing isn’t all that competitive with Verizon’s 20/20 symmetrical FiOS for $64.99 a month.

    DOCSIS 3.0, SDV, and all-digital television are merely delaying the inevitable capacity crunch. In a few years, when high-def IPTV takes off, cable’s bandwidth woes will return with full force, and Verizon will start peeling away customers quickly while cable companies struggle with expensive upgrades.

  • http://www.techliberation.com Adam Thierer

    As I wrote about here a few years ago, I am lucky to live in one of the first neighborhoods that was ever wired for FIOS in Virginia and my experience so far has been great. And just last month Verizon boosted there basic tier broadband offering from 5/2 up to 10/2 at no extra charge. (I think I pay $42 per month for that entry level service). But you can get up 50/20 in my neighborhood if you want it and there’s also a symmetrical 20/20 offering (I think that’s like $60 bucks) for aggressive uploaders and aggressive online gamers. Pretty cool. But 10/2 is plenty for me right now the only thing I would need my bandwidth for is high-def movie downloads. Those big HD files can still take a few hours to download them on my Xbox 360 or Playstation 3. But I just order them overnight and they are on my hard drive in the morning.

    Verizon’s problem going forward is going to be uptake. There’s just not enough people switching over from cable right now. VZ has made a huge gamble with this sort of fixed capital investment and a lot of folks on Wall Street are wondering if they can make the math work as cable works to improve its offerings and induce customers to stick with them. It will be interesting to see how it all plays out.

  • Ryan Radia

    I still think Verizon has a real shot of prevailing in the long-run. Since fiber-optic cable can transmit a virtually limitless amount of data, Verizon has to use its comparatively high capacity to differentiate FiOS from cable. That means offering more HD channels, a wider selection of on-demand movies, and fatter Internet pipes. Even in Minneapolis, where Comcast has rolled out pre-cert DOCSIS 3.0 gear, cable’s pricing isn’t all that competitive with Verizon’s 20/20 symmetrical FiOS for $64.99 a month.

    DOCSIS 3.0, SDV, and all-digital television are merely delaying the inevitable capacity crunch. In a few years, when high-def IPTV takes off, cable’s bandwidth woes will return with full force, and Verizon will start peeling away customers quickly while cable companies struggle with expensive upgrades.

  • http://bennett.com/blog Richard Bennett

    I don’t know that there’s an inevitable “bandwidth crunch” down the road somewhere; rather, there’s an evident demand for more bandwidth and probably always will be. What seems to be happening in the neighborhoods is fiber moving closer and closer to the home, creeping like Kudzu until it’s all the way there. This will probably take ten years, and in the meantime we’ll have various forms of hybrid copper/fiber networks. Even for Verizon, as soon as the fiber hits your home, their ONT splices it onto coax cable with MoCA, as they’re reluctant to re-wire the interior wiring in each home.

  • http://bennett.com/blog Richard Bennett

    I don’t know that there’s an inevitable “bandwidth crunch” down the road somewhere; rather, there’s an evident demand for more bandwidth and probably always will be. What seems to be happening in the neighborhoods is fiber moving closer and closer to the home, creeping like Kudzu until it’s all the way there. This will probably take ten years, and in the meantime we’ll have various forms of hybrid copper/fiber networks. Even for Verizon, as soon as the fiber hits your home, their ONT splices it onto coax cable with MoCA, as they’re reluctant to re-wire the interior wiring in each home.

  • http://pff.org Berin Szoka

    Somehow, I doubt many of my neighbors in Shaw are as excited about this as I am. I also wouldn’t underestimate the likelihood that the City will bleed Verizon dry. For example, can you imagine the outcry when Verizon starts rolling out FIOS in all the whitest parts of the City (where, one might safely assume, the uptake rates are likely to be highest)?

  • http://techliberation.com/author/berinszoka/ Berin Szoka

    Somehow, I doubt many of my neighbors in Shaw are as excited about this as I am. I also wouldn’t underestimate the likelihood that the City will bleed Verizon dry. For example, can you imagine the outcry when Verizon starts rolling out FIOS in all the whitest parts of the City (where, one might safely assume, the uptake rates are likely to be highest)?

  • DC Cable Lover

    I'm excited about having the option of FIOS, but many, if not most, DC residents already have a choice between Comcast Cable and RCN Cable. That competition has provided me great rates. I currently have 20mbps internet service, unlimited local/long distance phone, and more than 300 cable channels including all the premium channels (and DVR plus free video on demand) for about $157.00 per month. It's really a pretty good deal.

  • DC Cable Hater

    The competition between Comcast and RCN is a joke. RCN has too many service interruptions and quality is horrible. Comcast has high prices and poor quality internet. That deal you point to is a limited time only deal. I have only one premium channel set and no phone, and pay the same price.

    Gimme some FIOS

  • DC Cable Hater

    The competition between Comcast and RCN is a joke. RCN has too many service interruptions and quality is horrible. Comcast has high prices and poor quality internet. That deal you point to is a limited time only deal. I have only one premium channel set and no phone, and pay the same price.

    Gimme some FIOS

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