Verizon Communications Inc. said last night that it would invest $1 billion in Philadelphia to compete with Comcast Corp. for pay-TV and Internet services, and it urged City Council to act quickly on its proposed 15-year agreement.
City Council members lauded the prospect of pay-TV competition, but also sharply questioned how quickly it might happen and which neighborhoods would get the new Verizon FiOS service first. They complained that they felt rushed to make a decision.
Mayor Nutter's administration disclosed the proposed 15-year franchise agreement with Verizon on Nov. 13 after quietly negotiating the deal over several months.
The agreement faces political headwinds from Comcast Corp., which has the sole cable TV franchise in Philadelphia and has its headquarters in Center City. Its only current competition is satellite TV services.
Verizon said it would like the franchise agreement approved by City Council this year and has warned that Philadelphia was competing with other cities for the investment.
Verizon will spend the $1 billion on installing the fiber-optic data lines that deliver to homes TV entertainment, high-speed Internet and phone service. The lines replace its copper phone lines. The company says its own crews and contractors will do the fiber-optic installations.
Verizon will make the FiOS service available to one-third of city residents within three years and all residents in seven years, according to the agreement. Among the areas in the first phase are West Philadelphia, Germantown, Chestnut Hill and Southeast Philadelphia.
In a map distributed by Verizon, the Far Northeast would be part of the second phase of the Verizon build-out, or installation plan. "I don't know what the rush is," Councilwoman Joan L. Krajewski said. "I think they ought to rush back to the table and talk about the Northeast." Other areas in the second phase include Mayfair, Roxborough and Eastwick.
A Verizon official said it would not disclose zip-code-level build-out of the new high-speed network because Comcast could then target those neighborhoods with special promotions and multiyear contracts.
Paul Trane, a Verizon consultant who helped negotiate the deal and testified at the public hearing, said Verizon needed to sign as many customers as possible to make the network profitable.
The company would privately disclose the build-out plan to city officials, Trane said, to ensure the firm was not targeting wealthier neighborhoods for the service.
Trane urged City Council to act and said cities with pay-TV competition could see monthly bills $10 to $15 lower than cities without competition.
Last night's hearing was before the Public Property Committee. The panel did not take action, and Councilman Darrell Clarke scheduled a second public hearing for 9 a.m. next Thursday.
Residents and community leaders spoke at the well-ordered and drama-free hearing, which lasted about three hours.
"We want better service for less money," said Roberta Faison, who lives near Temple University. "My cable bill has gone up, up, up, and the service is not that good. We live in America, and I think we should have the freedom of choice."
Comcast has said that the Nutter administration is rushing the agreement and that the cable giant would like more detailed plans on Verizon's FiOS build-out.
The cable company said its franchise agreement with the city called for about $10 million in free cable and Internet services to the city and school system over 15 years. In its build-out, it said, it had to disclose in great detail which neighborhoods it provided with new service and when, and it faced a fine if it did not meet targets.
Verizon said its proposed agreement provided for $11.3 million in grants and could include posting a $13 million performance bond.
Verizon got a pay-TV franchise with New York City in July. The company also is negotiating for one in Washington.
Late last month, Wilmington officials said they would not approve a video franchise with Verizon without certain changes, including a provision for $1,000 daily fines if Verizon failed to wire the entire city in five years.