So Far, FiOS Nay-Sayers Proven Wrong > The Future

reply to fAcEtIOUs

Re: Not so fast

Boy, you don't give up do you? From the intranet by Peter W. Thonis Senior Vice President of External Communications, talking about a blog that was bearish about FIOS.

"Based on our four years of experience deploying and selling FiOS, I thought I'd offer our own observation about the bear's view:

It's near-sighted.

Verizon's investment in FiOS was a strategic decision looked at from several perspectives. The Times' bear seems focused only on the short-term economics of the investment. Fair enough. But even at that, some of his underlying assumptions are wrong.

The facts are that our return on FiOS will exceed our cost of capital. When looking at the economics of the investment, we see significant financial benefits from maintenance expense savings, and we track three metrics we consider critical:

1. Capital costs

– We said our target per home passed was $700 by 2010, and we are ahead of plan to achieve that objective. In fact, we’ve already beaten the target.

– We said our target per home connected was $650 by 2010, and we’re on plan to hit that target.

2. Penetration

-- We said Internet penetration would be 35-40 percent by 2010 and we are on track to achieve that objective with a current penetration of 24 percent.

-- We said TV penetration would be 20-25 percent by 2010 and we already are at 20 percent so are now saying we will exceed 25 percent.

3. ARPU (average revenue per customer per month)

-- Our average revenue per subscriber is more than $130/mos and better than plan. For those with the triple play (a bundle that includes FiOS voice, Internet and TV) it is even higher.

Still, any analysis of today's economics gives only a partial view of the real value of FiOS to Verizon, our customers and our investors.

When we looked at FiOS, we looked not only at what was financially prudent today, but also where communications and entertainment technology was headed tomorrow -- and 10 years from now. We looked at how customer demands would change and grow. We even considered how regulators and policymakers might come to value the great potential of broadband to provide an economic stimulus to the U.S. economy, and perhaps even some solutions to our health care and environmental concerns.

In the near future, we see the benefits of having a converged set of products and services. We see new services that will drive additional revenues. For example, in our view, FiOS Internet is a natural replacement for outdated cable-modem technology, with fiber capacities better suited to handling streaming media and the burgeoning, bandwidth-intense applications being developed for everything from social networking, to gaming and entertainment, to work-at-home, education and health care. We also see wireless as a more feature-rich replacement to cable-based telephone services.

Our fiber network will create new uses. We didn't build it to provide plain old cable TV service. Instead, it's our view that customers will increasingly demand the types of wireless and fiber broadband services that are just now beginning to emerge."
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RIP my babys Buttons 1/15/94-2/9/07 & Beamer 7/24/08, Buttons, Buttons video, Beamer

Thanks for info.
The link for that posting you made is here:
»policyblog.verizon.com/PolicyBlo···iOS.aspx

And the rebuttal to those Verizon claims on cost per home.
»bits.blogs.nytimes.com/2008/08/1···pay-off/

reply to fAcEtIOUs
According to the report you linked to-- Verizon has fios built and available to 11.9 million homes. Verizon has spent 23 billion-- which includes construction to all 11.9 million homes and installation to all homes subscribing to fios. There is no break down in the report as to construction and installation monies or how many of there broadband customers are fios vs dsl.

The rough math is 23b/11.9= 1932.77 which is a sum that mixes passed and installed homes. My understanding roughly breaks down into 1500 per home passed in construction expense and roughly 1000 per subscriber to get them "hooked up".