Verizon accused of red-lining Buffalo in FiOS buildout

Steve Donohue, FierceCableIf you caught the newscast on NBC's Buffalo, N.Y. affiliate Wednesday, you'd be left with the impression that consumers are taking to the streets to demand that Verizon (NYSE: VZ) construct a network to offer its FiOS TV and Internet services there.

One of the top stories in Buffalo was a report about a group called "Don't Bypass Buffalo," which has been pressing the telco to invest in constructing its FiOS network there. The coalition, which is backed by labor unions, the NAACP and other civic, religious and community groups, is accusing Verizon of red-lining in Buffalo, or bypassing the city to offer FiOS in wealthier suburbs.

Verizon, which halted new FiOS construction nationwide last spring, denies it is red-lining in Buffalo, and the company tells consumers that they can still get pay TV service in Buffalo from Verizon through an agreement it has to resell DirecTV satellite programming. But considering that the telco has built a video hub in Buffalo which delivers FiOS to Orchard Park and other wealthier suburbs, it may find it challenging to shake off the red-lining accusations.

Time Warner Cable (NYSE: TWC) is the incumbent cable operator in Buffalo. In other cities that have seen consumers push for Verizon or AT&T (NYSE: T) to market cable services, consumer groups often argue that the incumbent cable MSO needs competition in order to keep subscription prices from ballooning. But the "Don't Bypass Buffalo" coalition doesn't mention Time Warner Cable anywhere on its Web site, or in any of the local news stories where it has demanded that Verizon extend its FiOS network to Buffalo.

Instead, the coalition, which is funded by the Communications Workers of America (CWA) and the AFL-CIO--two unions that represent Verizon employees--argue that building a FiOS network would bring jobs to the city and boost the local economy.

With an unemployment rate in the Buffalo region of 7.7 percent, the city, like most American cities, could use more jobs. Verizon is focused on marketing FiOS TV and Internet services in the 182 cities and towns New York state where it already has FiOS franchises, and it doesn't appear that it will cave in to pressure to extend FiOS in Buffalo and other markets. But as long as it continues to offer FiOS in wealthier suburbs, while bypassing cities like Buffalo, it will continue to see red-lining accusations.--Steve