Copyright 2004 Times Publishing Co.

June 2, 2004 Wednesday

In a move that could portend big changes in Hillsborough County's cable TV market, Verizon Communications said Tuesday it is exploring the possibility of launching pay-TV services in Tampa and unincorporated Hillsborough.

The company's plans are still very preliminary, and would require installing fiber optic lines to carry the video signal. Verizon spokesman Bob Elek said "we just don't know what form that's going to take or whether it's even going to happen here."

But Elek acknowledged that the company is planning to meet with Tampa and Hillsborough County officials to determine what would be required, legally, to sell TV service.

"We're sort of investigating things," Elek said.

If Verizon's plans reach fruition, the company could pose a significant challenge to Bright House Networks, the sole cable TV carrier in most of Hillsborough.

In the absence of more serious competition, Bright House's standard cable TV package costs $45 a month in Tampa, $15 more than in St. Petersburg, where Bright House competes with Knology Inc. of West Point, Ga.

Knology entered the Pinellas market in December when it purchased Verizon's Americast cable TV business. Verizon inherited Americast from GTE Corp. but had no interest in running a conventional cable network, Elek said.

But like other major local phone carriers, Verizon remained keenly interested in offering TV services to counter the growing competition of cable companies that are increasingly offering phone service. Knology, which already sells cable TV and high-speed Internet services in Pinellas, is planning to launch local phone service to complete the third leg of its planned "triple-play" service line.

Part of the phone companies' response to the competitive threat from cable has been to pair up with satellite TV carriers DirecTV and Dish Network to offer discounted bundles of phone and TV service.

But the more important aspect of their strategy involves upgrading their traditional copper-wire networks with ultra-high-bandwidth fiber optic lines to launch advanced services, including TV channel lineups that rival those of cable companies.

Verizon is testing TV services in Brambleton, Va., while SBC Communications is testing such services in San Francisco. Qwest Communications of Denver, Colo., has the most experience, having launched TV services in the Phoenix, Ariz., metropolitan area in the late 1990s, albeit over its existing cooper network.

"It's a way to increase revenues they're getting from each household," said Michelle Abraham, a senior multimedia analyst for In-Stat/MDR, a Scottsdale, Ariz., market research firm. "They're losing revenues to wireless, competitive carriers and the cable companies."

Verizon said earlier this year that it plans to install new fiber lines past about 1-million homes in parts of nine states by the end of 2004. Elek said Verizon has begun preparatory work to install such lines in Hillsborough.

Hillsborough is the first Florida county where Verizon is exploring offering TV service, Elek said. He said Verizon selected Hillsborough because its relatively small number of municipalities would make it easier to negotiate whatever agreements might be necessary.

Kevin Hyman, president of Bright House Networks Tampa Bay, said he welcomed the competition but expressed skepticism about Verizon's commitment to TV service, noting its sale of Americast last year. While Hyman said Bright House may have an update later this month on the status of its plans to launch local phone service, he added that "our plans . . . will be totally independent of what Verizon does."

Mindy Snyder, cable television manager for the city of Tampa, confirmed that she had met a month ago with an attorney representing Verizon.

Because Verizon would need to install fiber lines "using the public's right of way," Snyder said, she thinks the company would need to sign franchise agreements with the city and the county in order to launch pay-TV services.

Elek said the company was still determining whether franchise agreements would be necessary, adding that "if a franchise agreement is what we need to do, we'll do what's appropriate."