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JPLPremium
join:2007-04-04
Downingtown, PA
kudos:1
1 edit | reply to baineschile
Re: Not so fast said by baineschile:The average price to run FTTH is $4000 per home. Obviously, Fios is a great product, and delivers what the consumer wants. What it means though, if the average fios arpu is $100, its going to take 40 months (of a customer not missing a payment or switching providers) to BREAK EVEN. we wont know if fios is truly a sucessful investment for at least another decade....when they have significantly more penetration in larger cities. if there is a discovery in the next few years that cable other copper telcos can take significant advantage of (e.g. 2ghz systems) at a low cost, then the fios investment wont look as pretty. There's one thing that's missed in the discussion of the numbers, though. Verizon said that when their roll-out of FiOS is complete (~2012 IIRC) they should be SAVING about $1billion/year in reduced maintenance costs. Even if they only hit half that, think of what that means year after year. Fiber doesn't degrade - copper does. Fiber isn't prone to atmospheric conditions and disruptions, copper is. About the only thing you can do to fiber to get it to stop working is to break it.
Also, FiOS is more than just about laying fiber to the home. When one tech came out I started asking about the system over all. When he figured out that I had more than a rudimentary understanding of it, he got into some details. The automation that's baked into the system is impressive. The ability to diagnose and fix many problems remotely, without the need for a truck-roll, is a big savings to the company.
Yeah it's a heavy up-front cost, but in the end, there are huge cost savings as a result. One last item on this front - copper is powered... the fiber isn't (well, it's not when it gets to your home). The signal doesn't degrade like it does with copper. Cable companies are therefore required to have boosting stations along the way to keep the signal strong when it gets to your house. That's not a problem that FiOS has. Also, Verizon doesn't supply the power for the sigals in your home - you do. Think of how many homes will be serviced by fios, and calculate how much that saves the company in electricity costs as a result. | |
DolganPremium
join:2005-10-01
Sun Prairie, WI Reviews:
 ·Charter
1 edit | The amount of savings in maintainence costs are purely speculative at this point. The only known quantity with reduction in costs is that fiber does not corrode/decay like the traditional copper lines, and is not succeptible to electrical damage. Fiber will still be affected by fires, line cuts, earthquakes, landslides, and etc. Less techs should be needed, and lower costs should be recoginized--the amount of savings is unknown yet.
You fail to factor in that Verizon is currently paying to maintain 2 networks{paying as little as possible for band aids to the copper network}, and will continue paying that cost for the forseeable future--well past your 2012 date of FTTP deployments ending. The initial FIOS rollout is expected to end in 2012 with a target of 50%+ of homes/businesses in Verizon's footprint to have been passed. The Execs plan to assess future deployment strategies/goals at that time. It will be partiallly based upon take numbers{saturation} and the costs of driving the product deeper into smaller/more rural areas. Do not know the target saturation numbers expected by that point, but would be confident enough to say 50%+ is reasonable. That being said, Verizon will still have customers on copper in FIOS capable areas in addition to having areas where FIOS has not been deployed. The Regulatory bodies will only be appeased for a limited time with Verizon's deployments of FIOS as an excuse for deteriorating network reliabilty for VZ copper customers.
We have seen a continuing trend of Verizon failing to meet standards of service in multiple areas, across the entire footprint we serve. This includes delayed orders, length of time to install new service, and length of time to repair Out of Service conditions. The biggest fines/outcry has been in the large markets on the East Coast {MA, NY, and FL reg bodies have come the hardest}, but the fines are also increasing in OH, MI, IN, and IL as well. This will force a larger investment to many parts of the network VZ has been ignoring[unless they are able to sell off some of the areas]. This will also add to the time before the full benefit/cost savings of FIOS/FTTP will be realized. | |
JPLPremium
join:2007-04-04
Downingtown, PA
kudos:1 | I agree that those savings are speculative at this point. How can they be anything but? They haven't happened yet. My point is that you can't just look at the cost side of the equation - there's another side to it as well. You can't just look at the upfront cost, and assume everything else stays the same. It doesn't. There will be savings to be had with maintenance costs - whether it's $1billion/year or not remains to be seen, but even at a fraction of that it's still a very substantial savings.
Likewise, operational costs for fios should be lower than copper as well. I mentioned the fact that the fiber is unpowered getting to your house, and the fact that verizon doesn't need to boost their signal like cable has to.
Yes, it will be a while before they recoup the cost of FiOS, but given its popularity (they added more TV customers than anyone the last 2 quarters, e.g.), I think they're going to recoup them faster than many of these analysts anticipate. One other number that isn't talked about is their penetration rate. If I recall correctly, I think it's hit something like 20% for their TV service. That's pretty astounding - it probably needs to be higher than that, but it's been increasing steadily as well. | |
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