Yesterday, Verizon proposed to build a fiber optic network covering all of New York City. The proposal comes just one day after the City’s Department of Information Technology and Telecommunications (DoITT) published notification of the RFP for cable television providers, which is how you know DoITT’s RFP (request for proposals) and Verizon’s proposal were worked out in tandem over months of closed-door negotiations.
Verizon is offering to finish the installation by midyear 2014, provide a public safety INET (institutional network), pay franchise fees equivalent to five percent of gross revenues on cable TV service, channels for public access. As the precise details emerge and once I’ve had a chance to read the RFP, I’ll give you my assessment on the fine points, but that doesn’t sound like enough off the bat given the scope of the deal.
A hearing from the Franchise and Concession Review Committee is forthcoming. I will keep you posted on that. You should plan to attend.
For background and a discussion of the issues at stake, see the article I just published with Gotham Gazette: Fiber Optics: Bringing the Next Big Thing to New York
This is another example of a phenomenon you may have heard or read me describe before: The general policy and market rules of media simply do not apply to New York City. Other cities are having trouble attracting or holding onto a $20 million investment for a wireless network while New York has a company proposing to invest $5 billion over 6 years to build a fiber optic network and become the second (third or fourth if you count satellite) entrant to the video service. Keep in mind that the incumbents are not citywide: Time Warner and Cablevision currently divide the city between them:
(Click the image to see the map of current franchise areas.)
The scale is hard to fathom. It’s like $100 per person per year or $300 per household, of which there are about $3.1 million – though that’s not counting businesses. It’s around $3 million per year for each of the city’s 322 square miles – as if all those square miles cost the same or were worth the same.
But the rate the money goes into the city is not the most important number. The important number is how fast it goes out. How much will Verizon make off each person, business, or square mile, and over what time frame? Once they put this infrastructure in place, they are going to hold on tight and make as much money as they can off of it. And anyone who wants to compete at the speed levels Verizon will be offering will have to match their massive investment.
We might only get one shot at building a fully fiber optic network for our city. We should try to get it right.