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Telco TV Bet Still Raises Concerns

From Long Island, N.Y., to the outskirts of Dallas, phone-service giant Verizon Communications is making deeper inroads into the TV market. In the span of a half-hour on Sept. 26, Verizon won approval from officials to offer TV services in Massapequa Park, N.Y., and Fairfax County, Va.

That came days after it began providing more than 300 channels to residents of Keller, Tex., a community of about 34,220 near Dallas, and it follows an announcement that Verizon inked a deal with Disney to carry ABC, Disney, and ESPN channels over its service.

The introduction of FiOS, the fiber-optic cables that deliver TV service to homes, marks the early stages of a sea change in telecommunications: Companies that traditionally specialized in phone, wireless, and Internet services are now rushing to deliver TV and video.

New York-based Verizon and peers including SBC Communications are locked in a land grab with cable-TV operators such as Comcast and Cablevision, which have long competed for high-speed Internet customers and are now carving out a widening share of the market for phone service. Telecom providers are trying to fend off phone-line losses and step up sales growth by providing the same package of services a customer can get from a cable carrier.

The telcos better pick up the pace. By the end of 2007, 12 percent of residential consumers will be buying phone service from cable outfits, vs. 4 percent now, according to tech consultancy Convergence Consulting Group. Over the same period, phone companies will have signed up only 2 percent of TV-service subscribers, CCG predicts.

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