Do Cable Companies Infringe?
Do the Verizon patents mean that cable companies are infringing as Vonage was? Verizon management was asked this question in their last conference call, but declined to answer in specific terms. We think it is wrong to assume, however, that the cable companies are not infringing (in Verizon’s view), simply because Verizon has not filed suit against any. Verizon’s current focus for battling the cable companies in court is based upon getting the FCC to apply the universal charge to all phone lines, not just “local” phone lines. The universal charge historically has been used to subsidize local phone service in rural areas, but is collected only on lines installed in homes on the traditional copper-wire telephone system. It is not applied to VOIP phone lines. Nevertheless, after reviewing the Verizon patents extensively, we think they represent a risk factor with respect to investment premises for the cable companies. Although this risk is difficult to estimate, if it materializes, the ne
