It's not exactly a David and Goliath battle. More like Goliath vs. Goliath as Verizon goes head-to-head against Comcast for cable TV subscribers.
And at least for now, it appears that consumers — and the communities they live in — will be the ultimate winners of the battle of the two telecommunications giants.
Verizon, with $93.5 billion in global sales last year, is methodically working its way across Massachusetts, installing a fiber-optic network capable of bringing high-speed Internet, TV and telephone service to millions of potential customers.
The only hitch is that in each of those communities, Verizon has to get a license to offer TV service — just like the cable companies that are already there.
Comcast, a $30 billion company, is one of those cable license holders in a majority of Massachusetts communities. In the Merrimack Valley, Comcast offers TV, phone and Internet services to 70,000 customers in Andover, North Andover, Methuen, Lawrence and Haverhill.
Despite the near lock Comcast has locally, Verizon is slowly edging in, picking up new customers in Andover, Lawrence and Methuen and eyeing Comcast subscribers in North Andover. For now, Haverhill is not a target.
"We can leapfrog the incumbent cable company, steal their customers and give them more services," said Verizon spokesman Phil Santoro. "You can do so much more on fiber. It's already starting to pay off. There are lots of customers making the switch because there's such a huge difference in the two technologies."
Comcast spokesman Marc Goodman says the company isn't worried about Verizon, in part because it already has other competitors in the TV arena.
"There are two satellite operators in every single community, via Directv and Dish network," Goodman said. "And people can also have antenna TV service. Our customer numbers are strong and steady — more than 1.6 million in 2007."
He added that much of Comcast's network is made up of fiber-optic cables and that its download speeds are just as good as Verizon's.
Ups and downs
Still, the number of Comcast subscribers has declined slightly where Verizon offers its fiber-optic network, or FiOS.
As of the end of last year, Comcast had 1.65 million subscribers in Massachusetts, down about 11,000 from the previous year. Meanwhile, Verizon had 78,406 subscribers in 61 cities and towns, up from 11,982 the year before. Verizon plans to spend $200 million to bring FiOS to 53 more communities this year.
In Andover, Verizon went from just 671 customers in 2006 to 2,008 last year. The company has 1,208 new subscribers in Lawrence and 950 new customers in Methuen, both of which just signed 10-year contracts with Verizon. Meanwhile, Comcast lost about 1,000 subscribers in Andover, 600 in Lawrence and 400 in Methuen.
"A lot of people have called and are eager to sign up for FiOS," said Matthew Kraunelis, chief of staff for Mayor William Manzi, who helped negotiate Methuen's TV contract with Verizon. "In the past, we'd get calls from people who weren't happy with Comcast, but they had no alternative. Now, with competition, they can play the companies off against each other."
Both companies are battling for customers with low introductory rates for so-called "triple play" bundles of Internet, TV and phone services. Comcast offers all three for $99 for the first 12 months, with the price rising to $130 or more after that, depending on the channel lineup. Verizon's introductory rate is $104.99, which can be locked in for one or two years, or not locked in at all, said Santoro, who said the price is expected to go up to after one or two years.
At one point, Verizon even offered free TVs to first-time subscribers.
"This keeps prices down and helps the consumer," said Tony Torrisi, the finance director in Andover, which was one of the first local communities to negotiate a contract with Verizon.
Community benefit
Town coffers also benefit from the competition.
Contracts with both Verizon and Comcast require the companies to pay a fee that is meant to go to the city or town's public access TV stations. In the past, Comcast ran the public access stations as part of its contract, but the company is moving away from running those stations, opting instead to offer a lump sum to the city or town based on a percentage of its revenue from that community.
The money is then funneled to communities' public access stations, most of which are now becoming nonprofit organizations. Generally, Verizon has to comply with many of the same requirements as Comcast as it gets new licenses, including paying the public access fee.
Andover expects to receive $300,000 to $400,000 this year from Comcast and Verizon, most of it from Comcast because it has more customers. Torrisi said the town gets 5 percent of the annual revenues from both Comcast and Verizon.
About $225,000 will pay for public access programming produced by a nonprofit corporation from a studio at the high school. Some of the money also goes to maintain the extensive fiber-optic network that links all town offices.
In Methuen, Comcast pays the town about $565,000 a year, 4 percent of its revenues. A little more than $300,000 of that goes to the nonprofit Methuen Community Television, with another $154,000 for Methuen government and educational programming and $63,000 for MCTV capital improvements. The rest, about $39,000, goes to the city for Internet infrastructure improvements.
"It's a good revenue source for the city," Kraunelis said, "and one of the reasons we wanted to negotiate with Verizon — to get competition and the revenue."
North Andover next
North Andover has just begun negotiations with Verizon to bring FiOS service to town, said George Dague, chairman of the town's Cable TV Committee.
"Competition will be a good thing for the town and could mean lower prices for services," he said.
North Andover gets 2.7 percent of local Comcast revenue and expects the same from Verizon.
Negotiations may take a year, but crews are already replacing old telephone lines with fiber-optic wire, waiting for the OK from the town to start linking homes to the network.
If it weren't for the sometimes-protracted license negotiations, Verizon would probably already be in most cities and towns across the state, Santoro said.
Last summer, at a packed Statehouse hearing, Verizon and Comcast supporters battled over a bill that would have allowed Verizon to simply get a state license allowing it to offer services to every community in the state.
"We wanted to protect local access programming, but make it easier for folks to enter the marketplace," said state Rep. Brian Dempsey, D-Haverhill, one of the sponsors of the legislation.
But the bill stalled, and Dempsey said a committee was appointed to study the issue and make recommendations.
Santoro argues the town-by-town negotiations are a waste of time.
"The big things, like length of contract and how much is paid to the public access station, are more or less the same for every community," he said. "What takes time is the meetings, scheduling time, getting together, pushing documents back and forth for legal review."
Comcast battle for cable viewers
Community&Comcast customers&Verizon customers
Lawrence&16,162&1,208
Methuen&14,270&950
Andover&9,250&2,008
Boxford&2,071 &505
North Andover&9,558&0
Haverhill&19,940&0
Source: Mass. Department of Telecommunications and Cable
