Verizon Communications Inc. has hammered out a preliminary agreement to provide cable television services to Fairfax County, which, if approved by the county's Board of Supervisors, would offer the telecom giant a premiere launching pad for its push into the video market.
The telephone and Internet provider has been aggressively pursuing local jurisdictions all over the country, eager to establish a secure foothold in the cable TV market. The whole telecom industry is moving toward the "bundling" of voice, data, and video services into unified subscription packages, which has the nation's major telephone and cable companies battling for customers in each other's line of business.
Yesterday, Fairfax County released the proposed franchise agreement as part of the Board of Supervisors' agenda for its meeting next Monday, when county officials will vote on authorizing a Sept. 26 public hearing on the issue. The region's largest jurisdiction currently has cable agreements with two companies: Comcast Corp., which provides cable TV services to the Reston area, and Cox Communications Inc., which has approximately 242,000 cable customers in the rest of the county.
Verizon has put millions of dollars into a fiber-optic upgrade of its existing broadband system in the Washington area. The enhanced system allows the company to sell its TV service, which has only been tested in a few small markets so far. In a conference call earlier this week, Verizon officials said the company has signed franchise agreements with eight local governments around the country, was close to closing deals with 15 other jurisdictions and was currently in negotiations with more than 200, including others in Virginia and Maryland.
Yesterday, the Howard County Council voted unanimously to enter into cable franchise negotiations with Verizon during the next 90 days. On July 19, the Herndon Town Council gave its thumbs up to a cable franchise, allowing Verizon start offering cable to its 22,000 residents. Though some Herndon council members expressed disappointment that Verizon did not commit to putting all the upgrades underground, they approved the deal with the reasoning that competition in the once-monopolistic cable market would benefit consumers.
Fairfax County, with its million-plus residents, presents Verizon with a much bigger laboratory. "I believe Verizon is hopeful that this can be a template it can replicate across the U.S. I'm very pleased that we have done trailblazing here," said Gerald E. Connolly, chairman of the Fairfax County Board of Supervisors.
Verizon still has quite a bit of work to do before going head-to-head with the nation's major cable providers. The company has signed some agreements with television programmers, but it does not have a full lineup. "I don't see that many deals that [add up] to a full television package," said Patrick Comack, a cable industry analyst with Zachary Investment Research.
Fairfax County's cable franchise negotiators made sure to emphasize that the proposed agreement represents equal treatment with the county's incumbent cable providers.
"Ultimately the customer will be the judge of their service and whether or not it's acceptable to them," said Gail Condrick Eskew, who acted as part of the county's negotiating team as director of the Department of Cable Communications and Consumer Protection.
Cox, which until two weeks ago exclusively held Herndon's cable franchise, argued that the town did not ensure equal treatment in its franchise agreement with Verizon. Though an outside counsel to the town deemed the franchise agreement fair, Cox complained about a clause in Verizon's agreement allowing that company to exit the market after three years, as well as other perceived disparities in customer service and construction standards.
"We have every confidence that Fairfax County will ultimately work to ensure a level playing field for all parties," said Alex Horwitz, a spokesman for Cox. "We certainly hope they take a different approach than the Town of Herndon did."
Staff writer Dina ElBoghdady contributed to this report.