FiOS vs. U-verse: Would You Like To Play A Game?

Doug Williams | July 02, 2008, 12:40 PM

Back in early June, communications intelligence firm OneTrak noted that Verizon had sought citywide cable TV franchises in certain north Dallas communities that are adjacent to its existing service footprint, but that are currently served by AT&T and Time Warner Cable.

At first, I was taken aback by this news. These are, after all, two of the remaining three RBOCs who refrained from out-of-region entry for voice and broadband in the wake of the Telecommunications Act of 1996, and I think we all know why that course of action was taken, and how successful it was. So why start competing with each other now?

I don’t think we are looking at a Jets vs. Sharks turf war just yet, but rather a few minor skirmishes where the carriers’ service areas bump up against one another in populated areas. Verizon still has a lot of work to do rolling out FiOS in-region (e.g., certain coastal communities in Massachusetts) where it can upsell to its current subscriber base and tackle (in most instances) one other triple competitor, rather than build new plant in un-served areas while tackling two competitors who bundle voice, data and TV. That this happened in Texas where local municipalities no longer play a role in the cable TV franchise process is an important point, but those regulations exist only in certain states.

DSLReports.com wonders if Verizon’s aggression could prompt AT&T to move towards FTTH. The very notion of that response is the key reason why Verizon will not make a strong move into AT&T’s territory. Right now, FiOS is a competitive differentiator for Verizon, something not currently matched (for broadband, anyway) by AT&T or cable operators (although DOCSIS 3.0 is coming). If AT&T feels it is necessary to adopt FTTH in response, Verizon’s advantage is diminished, the market becomes more competitive, prices are driven down, and the investment is harder to recover. I think Verizon will continue to take aim at certain communities where the FiOS system is mature and the ability to connect an adjacent community is economical and feasible from an engineering perspective. But it is quite a different story for Verizon to start playing global thermonuclear war with AT&T, where “the only winning move is not to play.”

Qwest, on the other hand, lacks both a cable TV-equivalent home-grown solution as well as an in-house wireless service, so the company had better start paying close attention to its Verizon-bordering markets, particularly in Washington and Oregon.