Another potential threat to entrenched cable television franchisees is emerging as major telecom providers are pushing to deliver programming over their fiber-optic lines.
Verizon Communications Inc. is negotiating with the cities of Redondo Beach and Hermosa Beach for cable franchises that would allow the company to offer existing phone and Internet customers TV programming over its fiber-optic network, dubbed FiOS.
The company began laying the fiber-optic lines over its existing copper phone network in July to bring bundled phone and Internet service to its customers. If approved, it could start offering TV service in Redondo Beach by midyear.
While it seeks a cable franchise, Verizon's push raises the question of whether government-regulated services should be subject to existing or 'legacy' regulation if distributed in an unregulated new medium.
SBC Communications Inc. has argued that the TV-over-fiber-optic product it is developing, Lightspeed, should not require city franchises because it employs streams of data bits in a fashion similar to the Internet.
"The FCC has already said that voice and data transmission using Internet protocol is not subject to legacy regulation," said John Britton, a spokesman for SBC West. "Our point of view is that it doesn't matter if it's audio or video or Internet data being delivered. It's a new technology and should not be subjected to legacy regulations."
Fiber-optic technology transmits data over pulses of light through glass or plastic threads. Its thin cables allow huge amounts of data to be transmitted at very high speeds at lower resistance than metal cables. They also cost more and are more fragile.
As part of its cable application, Verizon wants to circumvent a federal requirement that franchisees make programming available to all city residents. "We've argued that it's not required by city, state or federal statutes because we're a phone company," said Bill Kula, a company spokesman.
The cable companies, which stand to lose the most with the addition of another high-tech competitor, complain that if phone companies provide TV programming they should be subject to the same regulations.
"Our position is that they are circumventing," said Craig Watson, a spokesman for cable provider Charter Communications Inc. "Cable operators have been asked for many things by cities, and we think it's perfectly reasonable for other companies offering similar services and using the public rights-of-way to be held to the similar standards."
Verizon is already selling bundled Internet and phone services over the fiber-optic network in five states and is constructing it in 12 states.
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