Broadcasters could add a powerful ally in their attempts to force cable companies to carry the multiple digital TV channels they hope to offer after the head of the nation's largest telephone company
LAS VEGAS (The Hollywood Reporter) -- Broadcasters could add a powerful ally in their attempts to force cable companies to carry the multiple digital TV channels they hope to offer after the head of the nation's largest telephone company asked for their help to get its pay TV business started.
Verizon president/CEO Ivan Seidenberg, speaking at the annual National Association of Broadcasters convention April 18, offered to join forces with the broadcasters, arguing that an alliance would be mutually beneficial.
Seidenberg wants NAB's considerable lobbying muscle to back the company as it attempts to change the way it pays franchise fees to local governments.
Local governments and the cable industry want the company to come under the same local regulatory regimes that cover cable TV companies. That's something Seidenberg claims will stifle Verizon's attempts to become a true competitor to cable TV as it rolls out advanced broadband services including video.
"We ask you to lend your persuasive voices to help in the clearing away of this barrier to video competition and speeding the day when America's communications companies can use our fantastic resources to offer your content to provide a truly compelling alternative to cable," he said in a keynote speech. "I believe we are a natural partner as we explore the digital future."
Seidenberg said that while the company is willing to pay franchise fees, it shouldn't be required to comply with myriad other local regulations because the company already has local requirements as a telephone company.
"We don't want people to take the cable mold and stamp it on us," he said.
Seidenberg would like to see franchise requirements set at a state and national level rather than a local level. If it is required to meet the thousands of different sets of municipal regulations, it never could become a direct competitor to the cable industry.
Verizon appeared to be willing to give broadcasters something they want on its infrastructure that cable isn't willing to allow: multicast, must-carry. Digital TV allows broadcasters to air one channel of high-definition programming with its movie-quality picture and CD-quality sound or a half-dozen standard-definition channels. Broadcasters have lost their battle to win the requirement at the Federal Communications Commission, at least for the time being, after the commission voted against a requirement in February.
"We agree that that is something we can do," Seidenberg told reporters after his address. "Must-carry is something that we have indicated is beneficial for broadcasters, and we think for our systems would be fine."
Verizon senior VP broadband solutions Marilyn O'Connell amplified the point after Seidenberg left.
"We're supporting must-carry," she said. "As that evolves, I don't see us backing away from that."
If broadcasters and Verizon team up, that would make a powerful one-two combination in Washington. As the nation's biggest telephone company, Verizon has considerable influence on Capitol Hill and at the FCC. Likewise, NAB, though it has lost some influence recently, is still one of the most powerful lobbying operations inside the Beltway.
As an example of their good faith, the Verizon executives on April 18 announced that they had signed a carriage deal with NBC. While the details were sketchy, they said that it was structured similarly to deals with cable companies in which they agree to carry NBC offerings in exchange for its most popular programming.
NAB executives said they were willing to consider Seidenberg's offer.
"Local broadcasters are very encouraged by Mr. Seidenberg's remarks," NAB spokesman Dennis Wharton said. "Stations want our programming on as many platforms as possible. We look forward to continuing the dialogue with telephone companies over terms related to their carriage of our local broadcast programming."
Verizon is spending billions of dollars to build a fiber network in its 14 home states so it can offer a suite of services, including video. The company plans to make the services available to 3 million homes by year's end; each connection can cost the company $1,100 or more.
"We can offer HDTV and DVR functionality through the whole house, not just one set," he said.
Local broadcasters and the big networks could aid the telephone companies if the phone firms ran into trouble getting programming from cable competitors that also produce coveted content, like Time Warner Inc.
Seidenberg told the group that he understands the difficulties television stations are having in getting their extra channels carried on cable because some operators claim lack of space.
"This is where our fiber-based system really changes the dialogue from a conversation about scarcity to one about abundance," he said. "With the tremendous bandwidth on our systems, and with our business interest in providing as much content as possible, we believe we can effectively address all these issues in a way that expands the market for both of us."