Verizon pitches FiOS

Philadelphia residents could see a pay-TV slugfest.

Verizon Communications Inc. has quietly negotiated a deal with city officials to offer FiOS in Philadelphia, a market dominated by cable giant Comcast Corp., which is headquartered in Center City.

In a surprise move, City Councilman Darrell Clarke introduced a bill yesterday to award a 15-year cable franchise to Verizon. He offered it on behalf of Mayor Nutter, who took office in January and appears to have fast-tracked the talks. The measure faces hearings and would need Council approval.

Verizon says that it could offer some city residents FiOS TV service within three years of being granted a video franchise. Gale Y. Given, president of Verizon Pennsylvania, said in an interview that she considered Council approval "very likely" and would like it by the end of 2008. "It is a very big deal," she said.

Clarke said there was "a strong likelihood" that the cable franchise agreement could get passed.

Council is likely to seek answers on how extensively Verizon will offer FiOS so that the company doesn't "cherry-pick" the best neighborhoods; on minorities' and women's participation in the project; and on the cost of FiOS to customers, Clarke said.

Verizon will likely face political headwinds. RCN Corp., a cable overbuilder, failed to secure a video franchise in the city in the late 1990s after encountering fierce opposition from Comcast.

Verizon hasn't disclosed how much it would invest in the fiber-optic FiOS network in Philadelphia. The entire FiOS build-out is costing the telephone giant about $18 billion in more than a dozen states, and it has reached an agreement to offer FiOS in New York City. As of February, FiOS was available in 182 towns in the Philadelphia suburbs.

FiOS TV carries the Comcast SportsNet channel, which has rights to Phillies, Flyers and Sixers games. Satellite provider DirecTV, the nation's No. 2 pay-TV company, does not have Comcast SportsNet in Philadelphia, a bone of contention for sports fans who say they are forced onto Comcast. Many believe DirecTV hasn't penetrated the Philadelphia market as it has other metropolitan areas because of the sports blackout.

Verizon advertises better TV quality and Internet with its FiOS service but has not competed heavily on price with Comcast.

Costs for cable services are difficult to compare, because of levels of service, offerings, promotions and programming choices. A basic FiOS TV package of 295 channels is listed on Verizon's Web site for $47.99 a month. An Extreme HD package is listed by Verizon for $57.99 a month. HBO and the Movie Channel would add $25 a month.

Comcast's site lists digital service in a range from $55.90 to $125.65 in Delaware County. HBO and other premium channels are included in some of the Comcast packages.

Comcast spokesman Jeff Alexander said, "Competition is nothing new for us. Verizon is typically the fourth or fifth entrant in a market. We continue to compete every day on every level of our business."

Comcast would innovate new products and won't be distracted by something the "phone company may or may not do in coming years," he said.

Verizon will offer the FiOS service to about one-third of Philadelphia residents within three years of the city government's approval of a video franchise agreement, the company says.

The initial service will include parts of West, North and South Philadelphia, Germantown and the Greater Northeast, the company said.

The network investment would lead to more Verizon trucks and work crews in Philadelphia.

The Verizon agreement sets aside 15 public, educational and government-access channels for Philadelphia, or its Public Access Corp.; payment of franchise fees equivalent to 5 percent of gross revenues on pay-TV service; financial support for public-service channels; and four service centers.

The company approached the city in April and negotiations began in June. Verizon calls itself the nation's ninth-largest cable-TV company with more than one million pay-TV customers.