Verizon is currently wiring up New York City with fiber optic cables, but Boston mayor Thomas Menino wants to know why FiOS isn't coming to his city anytime soon. Menino has a theory, one that he recently aired during a radio interview: Verizon is retaliating. "They insinuated that we weren’t going to get it because of my position on telecommunications," he said.
Menino's "position on telecommunications" is that Verizon should pay more money. Specifically, Menino has been trying to change state law so that Verizon has to pay taxes on more of its network equipment that sits on public property.
Verizon's FiOS has already been installed in numerous surrounding cities, leaving Boston a "copper hole in the fiber donut," said Boston's Chief Information Officer, William Oates, to the Boston Globe.
The Globe has waded into the issue, too, penning an op-ed in which the paper argued that "Menino is right to insist that telecommunication companies pay their fair share of taxes. In Boston, the exemption shifts more than $5 million a year onto the property tax bills of homeowners, say city officials."
On the other hand, the Globe really, really wants FiOS, though it notes that Verizon has actually been slow to bring the service to the most densely populated parts of its coverage area: major cities.
This might seem odd, given that Verizon has itself been touting the huge advantage that FiOS makes when selling a home. Why not go where the most homes are spaced most closely?
Despite their density, cities can be expensive to wire. Infrastructure can be hard to access, landlords are finicky about connecting to their buildings, and digging up the streets is tough, dirty work. Verizon is currently bringing FiOS to places like New York City and Washington, DC, but years after the FiOS rollout, neither place is near completion.
In Boston, Verizon reps have insisted that the issues are all about costs and uptake—how expensive will FiOS be to install, and how many customers will sign up for the "triple play" of voice, video, and data once FiOS is in place?
When Verizon does get people to sign up, though, it also gets them to open their wallets. According to the company's new financials, which are out today, it added 300,000 FiOS subscribers in the last three months—at an average monthly bill of $135.
Boston's concern to bring FiOS isn't just about connection speeds. With cable operators rolling out DOCSIS 3.0 across the country, cable can currently meet or exceed FiOS speeds without much difficulty. Boston already has cable service, but what it really wants is competition, with the goal of pushing prices downward. Once cable and fiber-optic infrastructure is in place, such competition should exist for the foreseeable future, a huge boon to Boston residents.
But cities without FiOS can't do much except negotiate with Verizon. That's what Pittsburgh has been doing for the last year. With Comcast's 10-year franchise agreement with the city expiring this year, Pittsburgh officials have worked with Verizon to bring FiOS to the city (at least half of Pittsburgh must be served within three years).
Such negotiations often concern money (cities routinely demand a franchise fee, often some percentage of total revenue, to pay for using the public rights-of way). Pittsburgh will take five percent of revenue from both Comcast and Verizon, but the disputes can be over quite small amounts.
Pound Ridge, NY, for instance, is currently battling with the company over a $12,000 reduction in Verizon property taxes, and the company has withdrawn its franchise application over the issue.
Still, negotiating with Verizon is a nice problem to have. In much of America, the only choice (not counting wireless Internet) is cable or DSL. Here in Chicago, that option doesn't look a whole lot like "competition," since AT&T's top speed is 6Mbps in most places compared with cable's 50Mbps.
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