When a subscriber is unhappy with his service or the price of his cable bill, he can ask for a better deal or switch to the competitor. But in Norfolk, customers get only one choice for traditional cable – Cox – and lots of people are frustrated.
For years, residents have asked why they can’t get FiOS. The question is so common that it’s first on an FAQ on the city’s website. The canned response: It’s not for the city’s lack of trying. Norfolk officials have invited Verizon, through meetings and letters, to enter into a franchise agreement to provide fiber cable for residents.
Their latest inquiry was last week, when city public works and information technology staff spoke with Verizon representatives by phone. The company continues to refuse the offer, with Verizon spokesman John O’Malley saying the company won’t build out infrastructure in new markets.
“We made the decision a couple years ago that we were not going to expand FiOS beyond where we already had franchise agreements in place,” he said.
FiOS, which launched in 2004, was available in 18 million homes by 2010, when it largely completed its build-out phase. During that period, Verizon signed franchise agreements with other Hampton Roads cities – Chesapeake, Portsmouth, Virginia Beach, Hampton, Newport News and Poquoson – that allow the company to use public rights of way for its fiber-optics lines.
It’s unclear why, when the company was making franchise deals with other local governments in the region, Norfolk was left out.
“I really can’t answer that,” said Steven DeBerry, Norfolk’s chief information officer, who oversees telecommunications agreements with the city.
That makes Cox Communications essentially the only game in town, despite its not having exclusive rights in Norfolk. The only other TV-watching choices are satellite dish and online-streaming services.
For city leaders such as Councilman Tommy Smigiel, that doesn’t sit well. At a City Council meeting April 26, he aired complaints about Cox’s prices, saying the company’s charges are “out of control.”
“Because there is no competition, I think they know they can get away with this,” he said.
Sarah Buck, a Cox spokeswoman, said in an email that the company does face “stiff competition” and works to develop “the best value” for its customers. Cox declined to provide subscriber numbers, saying the information is proprietary.
Luring competitors to new markets has become more challenging these days because of behavioral shifts in the ways customers watch TV programming.
Consumers, especially young people, are moving away from cable subscriptions. About 19 percent of those 45 and younger, and 31 percent of people between 26 and 35, use paid video-streaming services, such as Netflix and Amazon Prime, as their main way of watching video, according to a 2015 Consumer Reports National Research Center survey.
If service providers believe customers are abandoning cable for alternatives, they may direct money into other technologies.
George Slover, senior policy counsel for the national Consumers Union, said customers have more leverage to negotiate prices and products in markets where they have choices. In the eyes of the Federal Communications Commission, though, Norfolk does have a competitive video market because of satellite dish services.
“Cable is one of the industries that is notorious for lacking in competition, and that’s because of the way it grew up over the years,” Slover said.
Initially, some communities gave service providers exclusive franchises to operate their systems. Rather than expanding through competition, companies grew by joining forces and merging. That has led some companies to get comfortable resting on their monopolies, Slover said.
Norfolk’s franchise agreement with Cox is up for renewal next February, DeBerry said. He declined to discuss any aspects of the deal the city might try to renegotiate.
High-speed Internet
In the meantime, city officials are exploring other ways to improve telecommunications services for residents, namely with high-speed Internet. City Manager Marcus Jones wants to spend $4.1 million next year on building out the city’s fiber network.During his fiscal 2017 budget presentation in April, Jones said the investment would be eight times the amount set aside last year for broadband. About $3.6 million of it would go toward infrastructure he believes will help Norfolk in future negotiations with Internet service providers. The remainder would go toward pilot projects to increase bandwidth in different areas.
The city also will have another meeting with Verizon this month to discuss other ways they could work together, such as with small cells or 5G technology. Small cells, usually installed on utility poles, can boost network capacity over short ranges. The 5G service, or “fifth-generation” technology, might offer network connections at rates exponentially faster than 4G. The technology is still under development, with trials possibly starting next year.
“We made it known that we would like to partner with Verizon on any prototype efforts,” DeBerry said.
©2016 The Virginian-Pilot (Norfolk, Va.) Distributed by Tribune Content Agency, LLC.
