Swift Approval

Last week, in Hempstead, New York, city bureaucrats voted to approve Verizon's application to build a competitive television distribution system. The final ruling was probably not ever in doubt given the intense lobbying effort being put forth by Verizon and AT&T to win approval for their video network build-out plans. What did surprise was the speed at which the authorities gave approval — less than a month.

This market of 750,000 will be a clear test of Verizon's ability to deliver a compelling alternative to the established Cablevision. We expect the bundled proposition to be the "quad play," offering customers video, broadband Internet access, landline and wireless telephone services. Verizon's presence will also test the capacity of Cablevision to use its incumbent position to counterattack Verizon's entry.

The stakes are obviously high — if you assume a conservative $2,400 per year, per household, you're talking about $1.8b per year in subscriber fees alone. We'd expect a full-fledged battle for years to come in Hempstead and in cities and counties around the country for at least the next decade or two.

The notion of the "triple play" — Internet, landline and cable TV — has been around for nearly a decade. The irony is that a decade ago it was the cable operators acting as the upstarts — and now it is the telcos playing the role of the protagonist.