Verizon (VZ) And Time Warner Cable (TWC) Have At It

April 11, 2008 by Douglas A. McIntyre

Verizon (NYSE: VZ) went sniveling into US District Court to complain that Time Warner Cable (NYSE: TWC) was running misleading ads about the phone company’s new fiber optic TV and broadband product. TWC better do all the lying it can. Verizon’s new product is, according to most analysts and the company, taking cable customers from the cable company. Time Warner Cable’s shares are down over 30% during the last year.

According to The Wall Street Journal "Verizon says that Time Warner Cable’s ad implies FiOS requires a satellite dish for TV service and that it isn’t able to bundle together high-speed Internet, video and phone calls." Since VZ is betting $23 billion on its product it may not be amused by the cable company claims.

There is after all, a lot at stake. Cable firm have been taking phone customers for the better part of five years. They have offered VoIP as a cheap alternative to regular phone service. The cable guys quaintly call their product the "triple play" of voice, broadband, and TV".

It was a good game while it lasted. But, with fiber-to-the-home, telephone companies can offer a similar service. It might even be argued that fiber has more bandwidth than most cable connections, making it easier to deliver a large number of HD programming channels.

Lying and cheating to get customers is nothing new in business. The cable companies just may have to do a bit more of it over the next few years.

Douglas A. McIntyre