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Richmond Times - Dispatch

Sometime in the future, Verizon Communications Inc. hopes to send out a message to many Virginians: You can buy TV programming from a telephone company.

Keller, Texas, yesterday became the first town in the country to receive Verizon's video services. It will stand as the first shot in the battle between telephone companies and their cable and satellite rivals.

So what does a Texan's tube have to do with the price of TV service in Richmond? A lot.

Take a peek at the next states on Verizon's hook-up list: California, Florida and Virginia.

Verizon announced in May that it is building a fiber-optic network in the Richmond area, which will allow it to provide high- speed Internet and, ultimately, TV programming.

If and when it begins offering TV service here, consumers may see competition on prices for cable, which for years have been rising faster than the inflation rate.

Verizon will run promotional offers to attract customers quickly to help offset its investment, predicted Cyrus A. Altimus, a professor at the Sydney Lewis School of Business at Virginia Union University. Rivals such as Comcast Corp. or DirecTV could slash costs to keep up with the new dude on the tube.

Whether Verizon's prices stay low would depend on a few factors, he said.

Or maybe not.

"Once [Verizon's] customer base settled, it'll all depend on how the others react," Altimus said.

If the cable and satellite companies do not respond to Verizon, he said, the telephone company's prices could rise over time.

Before Verizon can offer video, the company must gain franchise agreements from the communities in which it plans service. It hopes to be able to bypass that process with federal and state legislation.

In Texas, Verizon will quickly deploy TV service now that state legislation, passed last month, lets competitive carriers such as it and SBC Communications Inc. offer video without gaining local licensing agreements.

Similar bills are floating in Congress. Virginia officials are expected to look at the issue during the General Assembly session next year.

If such bills pass, proponents say, consumers could have more choices faster for a service provider. Opponents, mainly the cable companies, argue that approval would give phone companies the competitive advantage of not being required to serve all residents in the given locality.

Verizon gained a video-services agreement in July from the Herndon Town Council, making the community the first in Virginia to green-light the service. The Quantico Marine Corps Base has a video agreement with Verizon, and areas of California and Florida also have struck deals.

Deployments in New York and New Jersey also are planned.

In Keller, a town of about 30,000 on the outskirts of Dallas, subscribers will have access to Verizon's 180 digital channels for $39.95 a month.

Verizon began testing its fiber-to-the-home network in Northern Virginia in 2002, and it is building rings there and in the eastern part of the state.

The Fairfax County Board of Supervisors will hold a public hearing Monday afternoon on a possible licensing agreement with Verizon. Fairfax City leaders are scheduled to hear the matter Tuesday.

Verizon is building fiber-optic rings in 15 states, slightly more than half the states it serves. It is in franchise negotiations with 200 U.S. localities, the company said.