A Tale of Two States

Policy research is not usually this easy. Today my daily Google Alert mailing on “Verizon FiOS” yielded items on deployment out of Massachusetts and Washington State. From a policy perspective, the two states demonstrated a distance equivalent to their geographical separation. The report out of Massachusetts, a Verizon press release by way of MarketWatch, reported that the town of Ashland just joined 77 other Bay State cities and towns in offering its residents phone, TV and high-speed Internet via the company’s state-of-the-art fiber-to-the-home (FTTH) platform. Verizon also notes that FiOS construction is proceed in almost 100 Massachusetts communities. Contrast this with this blog item from Brier Dudley, a columnist with the Seattle Times:

Verizon will finally start offering its fiber-optic “FiOS” TV service next week in the Puget Sound region, at least partially. About 200,000 homes in Washington now have access to FiOS broadband. The TV service is coming to many of those homes by Sept. 12 at the latest, but it won’t reach all of them initially, spokesman Jon Davies said. Verizon still doesn’t have video franchise licenses in all the areas where it operates here. It’s been going city to city, securing franchises it needs to add TV services. Maybe next week’s launch will put pressure on cities that are still negotiating. Franchises were approved this week in Redmond, Mukilteo and Mountlake Terrace. Earlier they were granted in Bothell, Brier, Edmonds, Everett, Kenmore, Lynnwood, Marysville, Woodinville, Woodway and Snohomish County. A deal still being negotiated is for service in unincorporated King County.

So let’s see, that’s 78 communities in Massachusetts that have FTTH compared to 13 in Washington. Can you guess which state passed cable TV franchise reform that replaced the time-consuming, foot-dragging, city-by-city negotiations to which Dudley refers with a process that lets a would-be cable company apply for single franchise to serve anywhere in the state? Hint, it wasn’t the one in the Pacific Northwest. Ironically, video franchise reform was opposed by erstwhile consumer advocates who said new entrants like Verizon would limit their service to a handful of wealthy enclaves. In other words, they said consumers in states that passed franchise reform would see fewer broadband competitors, not more. May I repeat: There are 78 communities in Massachusetts that have FTTH service competing with cable companies. There are 13 in Washington. As I wrote in Reason’s 2008 Annual Privatization Report, states that move forward with franchise reform see an upswing in infrastructure investment from incumbent telephone companies, who look to cable TV and cable TV services to provide the revenues to cover their investment in fiber and DSL rollout. Verizon expects to spend $23 billion rolling out fiber optic-based broadband to 18 million homes in its territory between 2007 and 2010, but examples like these show how franchise reform legislation makes a difference as to where service rolls out and how fast it spreads.