Why Hub isn’t a top priority for Verizon’s new network

Verizon workers lay fiber-optic cable on Dorchester Avenue. Verizon workers lay fiber-optic cable on Dorchester Avenue. (John Tlumacki/Globe Staff)
By Hiawatha Bray
Globe Staff / July 26, 2009

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Verizon Communications Inc. says its advanced FIOS cable TV and Internet service is coming to Boston. It just won’t say when.

The delay has angered Mayor Thomas M. Menino, who says the company is exacting payback for the city’s unsuccessful efforts to change a state law that exempts Verizon, which also supplies telephone services, from paying millions in taxes on its network switches. Menino said that during a meeting with Verizon officials, “they insinuated that we weren’t going to get it because of my position on telecommunications.’’

But Verizon spokesman Phil Santoro said the delay is based solely on the company’s capital spending priorities, and pledged that Boston will have its day. “It’s just a matter of when,’’ Santoro said.

In 2004, Verizon began spending $23 billion to build the infrastructure for its new home telecommunication service. Rather than using the existing copper wires that have connected homes to telephone and cable TV service for more than a century, Verizon started to run fiber-optic cables, capable of carrying vast amounts of data, directly to 18 million households in 14 states by 2010.

Like other cable and satellite carriers, Verizon offers consumers a “triple play’’ package of services that includes telephone, cable TV, and a broadband Internet connection. Verizon’s service, called FIOS, offers more than 100 channels of high-definition television and Internet speeds as high as 50 million bits per second. The service has mainly been deployed in small towns and suburban communities. It’s available in 98 Massachusetts communities, including Boston suburbs like Braintree, Dedham, and Newton.

Only in the past year has Verizon has begun deploying FIOS service in New York City and Washington, D.C. But to the consternation of Boston offi cials, the company hasn’t set a date to bring FIOS service to this city.

Santoro said it’s very costly to cable a city. In small towns, cables can often be strung on above-ground poles, but in many city neighborhoods, they must be run through underground vaults. “Sometimes, the vaults that you need to get into are in such [bad] condition that you have to get in and reconstruct them,’’ Santoro said. “A lot of the conduits are old, old conduits that are falling apart.’’

Another problem is the higher percentage of apartment buildings in cities. FIOS requires an optical network terminal somewhere in the building, which is connected to the existing TV cables running to each apartment. In some cases, it’s necessary to run a new cable to each unit. The company has to get permission from the building’s owner. “You just can’t walk in and do that,’’ said Santoro.

Indeed, these problems already plague Verizon’s efforts to complete the installation of FIOS in New York City. Samuel Greenholtz, principal analyst at Telecom Pragmatics, a consulting firm in Westminster, Md., said that deployment in New York has slowed to a crawl, largely because of the difficulty in negotiating deals with apartment building owners. Verizon is “not enjoying the success that they had hoped for,’’ Greenholtz said.

Still, if Verizon is making the effort in New York, why not in Boston, too? At first, Santoro cited the state’s cable TV regulations. To begin offering TV services, Verizon must be licensed by regulators in each town or city. Santoro said that while this process often takes 90 days or less in many states, his company has had to wait as long as three years for a license in some Massachusetts towns. Verizon is backing a proposal currently before the state Legislature that is supposed to streamline the process.

But Boston officials say they’ll expedite the licensing process for the city. “We’ve been standing on our heads saying we’ll work with you,’’ said Mike Lynch, director of Boston’s Office of Cable Communications.

In fact, Santoro acknowledged that the main holdup in bringing FIOS to Boston is his company’s belief that the time is not yet right. “The issue really is cost, competitive landscape, and market potential,’’ he said. The question is, how many households will buy all three services - telephone, Internet, and cable TV? And how many are willing to switch to FIOS from their current provider?

Neither of Boston’s current cable providers - Comcast Corp. and RCN Corp. - run fiber-optic cables all the way to the homes or apartments of customers. Instead, they run fiber to nearby “nodes,’’ and use copper wires the rest of the way. Still, both companies say their systems offer the same high-end services as Verizon.

“We are all digital. We have 100 HD channels,’’ said Peter Aquino, chief executive at RCN, which is accessible to 251,000 Boston households. RCN’s Boston network offers Internet speeds as high as 20 megabits per second for $88 a month, and will soon introduce a new technology, called DOCSIS 3.0, that will allow for 50-megabit speed.

Paul D’Arcangelo, vice president of engineering for Comcast’s Boston operations, said his company is already using DOCSIS 3.0 and delivering 50 megabits per second for $99 per month for customers who also buy cable TV. The Comcast cable system also offers more than 100 high-definition channels. “We can match content, we can match speed, and we feel we have a broader range of product offerings,’’ D’Arcangelo said.

Still, Menino wants FIOS in Boston, if only to ensure vigorous competition and to provide citizens with multiple telecom options. “We’ve talked to them several times and asked them to modify their positions,’’ he said. Menino won’t back down on his belief that Verizon’s equipment should be subject to higher taxation, but he says that’s no reason to leave Bostonians disconnected.

Hiawatha Bray can be reached at