New York City Serenade: Cable Operators Dig In vs. Verizon

Multichannel-TV providers were mum on their competitive consumer pricing plans Wednesday, days after New York City solicited proposals for nonexclusive cable-TV franchises that quickly brought forward Verizon Communications. Making a formal application April 15, Verizon intends to offer video services via its FiOS TV service to New York, signaling that it will be an overbuilder trying to nab customers from two cable-TV incumbents.

Time Warner Cable has 1.4 million existing subscribers in New York (out of 13.3 million nationwide) and Cablevision Systems wires the Bronx and part of Brooklyn with 679,000 subscribers (out of 1.3 million total Cablevision video subscribers). New York is Cablevision’s largest franchise. Broadband overbuilder RCN also serves part of the city with video, broadband and phone service.

The City of New York formally requested video-service-franchise proposals April 11 that it said will be awarded on a nonexclusive basis. Time Warner’s and Cablevision’s existing 10-year franchises will expire in September, and renewals are not automatic. Given interest from multiple service providers, there’s speculation that the city will be demanding in mandating that franchise holders provide local enhancements, such as channels dedicated for education and government access.

Verizon, the telco for the New York region, said it already laid fiber optics in parts of New York, so physical plant to offer video services is already in place in some locations. It promised to offer FiOS TV to every New York resident within six years, or by mid-2014. It also offered to pay 5% of gross revenue on cable-TV service, matching the franchise-fee obligations of cable-TV operators.

A Verizon spokesman declined to elaborate on pricing except to note that its triple play of video, voice and broadband is priced at $94.99 per month in surrounding suburbs. FiOS TV notched 1 million subscribers nationwide at the start of the year.

Time Warner has franchises for Manhattan, Staten Island, Queens and part of Brooklyn, and a spokesman said it looks forward to getting franchise renewals.

In a statement, Cablevision said it “has a 20-year record of delivering the best cable-television service to our customers in the Bronx and Brooklyn over a state-of-the-art fiber-optic network and with a strong and enduring commitment to the communities we serve … The phone company [Verizon] has been privately negotiating with the city for more than one year and has yet to make the details of its franchise proposal public, so at this point, it would be inappropriate to comment further."

New York City Department of Information Technology and Telecommunications commissioner Paul J. Cosgrave said in a statement, “It is our firm belief that -- as in any business -- direct competition between cable providers will result in greater choice, lower prices and enhanced customer service for cable-television subscribers. We look forward to receiving and reviewing these new proposals.”