Cities without FiOS protest Verizon, cable deal

Five cities in New York, Massachusetts and Maryland that don’t have Verizon’s FiOS service are slamming the company’s tie-up with cable operators, saying Verizon would have “little incentive” to expand its landline service to their communities if the transaction is approved.

Elected officials and community groups from Boston and Baltimore, as well as from Albany, Buffalo and Syracuse in New York, asked the FCC yesterday to condition its approval of Verizon Wireless’ purchase of AWS spectrum on “specific guarantees” that Verizon will expand its FiOS network to their communities.

A Verizon spokesman did not immediately return requests for comment, but Verizon Communications general counsel Randal Milch testified at a hearing last week that FiOS “has always been intended to reach a relatively small portion of the country.”

Verizon decided about two years ago to halt expansion of its FiOS network after investing $23 billion in the service, which has only recently begun to turn a profit, Milch said.

The cities told the FCC that they were “deeply concerned” that Verizon would never build out its FiOS network if it was allowed to partner with its cable partners on marketing and cross-selling of each other’s services, an arrangement forged at the same time Verizon Wireless inked a $3.9 billion spectrum sale with the companies.

“Historic rivals will become partners – and consumers will suffer,” officials from Buffalo and Syracuse, N.Y., told the FCC.

Verizon Wireless’ AWS spectrum purchase from Cox Communications, Bright House Networks, Comcast and Time Warner Cable was mainly scrutinized for its impact on the wireless industry when the transaction was first announced last year.

But criticism of the landline portion of the arrangement has increased in recent weeks as questions have emerged about how the companies’ side deal could affect competition in the cable market. Milch testified that Verizon’s FiOS service would continue to compete with cable, even if its wireless stores began selling both services.