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So, Is This Where Verizon's FiOS Deployment Ends?
<50% served. Hopefully you got FiOS during the first deployment wave...
by Karl Bode 03:24PM Friday Mar 12 2010
Verizon's $23 billion investment into fiber to the home was frankly a bold and brilliant decision, spearheaded by CEO Ivan Seidenberg. Seidenberg understood that he needed to look past the myopic, short-term fears of investors and pour some serious money back into the network if Verizon truly wanted to be considered a next-generation broadband company over the next several decades. Because of that, a significant chunk of Verizon's network is now capable of providing 100 Mbps last mile residential connections -- and beyond. That said, we've always wondered where Verizon's investment would end.

Lately we've been getting some answers to that question. Verizon's investment in fiber ends right outside of cities like Baltimore, Maryland or Alexandria, Virginia. According to Verizon, the company is taking a contemplative pause to focus on marketing the service to areas that are already deployed.

But according to long-time industry analyst Dave Burstein, Verizon's essentially cutting and running on additional deployment plans, leaving a very large chunk of their footprint on last-generation DSL and copper-based voice networks.

Burstein tells Broadband Reports that he doesn't see Verizon expanding any further (with the exception of major cities where they've signed franchise agreements) unless they get money from Uncle Sam (aka, taxpayers). "They want to get on the gravy train, although I think the new, less competitive leadership is the primary explanation," says Burstein when asked why Verizon's shifting tactics. Seidenberg, the driving force behind the first wave of FiOS, is on his way out -- and his replacements aren't quite as bullish on angering investors for the sake of this whole "future" thing.

Verizon's FiOS fact sheet states their FiOS build "passes" (and that means fiber gets close to, but doesn't always necessarily serve) 15.4 million customers, or roughly 48 percent of total Verizon households. Considering the nebulous use of the word "pass," the actual number of Verizon homes capable of getting FiOS could be considerably less. "They've been talking for years about going to 75-80%, and they just threw that out," Burstein says. In his latest industry newsletter, he notes how the city of Alexandria was actually previously on Verizon's install agenda, having been told construction would begin several months ago.
Verizon has buildout commitments to New York and other cities that will keep some crews working, but had already suggested they might cut FiOS builds by 2/3rds in 2011. This is now a further cutback, canceling areas that for years they had been promising to serve. Verizon's Harry Mitchell sends their perspective. "The bottom line is that Verizon said in 2004 we’d build to pass about 18 million homes by year-end 2010, and we’re on track to do that with the franchises we currently have. Of course, we will also meet any buildout commitments we made in individual jurisdictions beyond 2010."
People in Philadelphia, Washington DC, or New York City (where Verizon has signed new franchise agreements) should still be seeing new FiOS deployments. In New York, Verizon's agreed to wire 100% of the city by 2014, but as with most of these agreements, there's ample fine print that gives Verizon the ability to wiggle out of obligations if they're not seeing the kind of video subscriber uptake they'd like. These city builds should push Verizon households covered past 50% or even to 60%, though that still leaves a lot of Verizon customers left un-upgraded. Verizon did not respond to a request for comment on what happens next.

Perhaps Burnstein is right and this is where the FiOS build ends. Though it's possible that Verizon wants to use LTE wireless service as their primary play for markets they don't believe are profitable enough for FiOS. If you're in more rural markets, or second and third tier cities, you may be waiting for a while if you're stuck on last-generation Verizon DSL. Given that many cable operators are only upgrading to faster DOCSIS 3.0 speeds if there's FiOS competition in their local market, that could be bad news on the next-generation broadband competition front for a significant number of markets.

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My views are my own.

2 recommendations

reply to MyDogHsFleas

Re: So, how's that "bold and brilliant decision" working for ya?

While you're praising IPTV, you have to remember that ultimately cable will move to the same thing. I can attest to the fact that Comcast has been talking about IPTV since the late 90's into the mid 2000's.

Look at how much bandwidth ATT has to the house to drive 4 streams + the internet. Think about cable TV now and the fiber coax system. You remove about 45 basic analog channels and look at the number of 6mhz slots you free up. Insert DOCSIS 3.0 and channel bonding and add in better network management on the last mile and how much bandwidth do you have left? .... think about that..

Also, don't forget that cable has fiber within a mile of the home as well.. they too can build out fiber at anytime. I don't see that happening for quite some time though. With data streams being the future, I see cable having more options and more choices in that fork in the road to take.. they could easily go the route of fiber the home.. or they can take an IPTV approach.. they can also simply go all digital, minus Tier 1, they can still upgrade systems to 1Ghz systems.. they have a lot of options.. Phone only has one real one.. fiber. Anything in between is just an expensive bandage.

SDV is a disaster as well.. I have to agree. With the consumer VERY slowly moving into owned equipment (Tivo.. hah!) you invalidate those with cable cards over night. Just imagine if more consumer boxes are added to the market.. that will severely kill a provider's ability to change technology with out a lot of noise from customers and government agencies. So yea, SDV, for that fact alone, is a disaster. The industry is in TOO much of a change right now to really shake it up with consumers in the mix right now.

And, any of the analog reduction isn't going to add more channels.. there are already too many channels as it is. You're simply going to find more HD channels and faster internet. I also wouldn't be surprised if we start seeing an end to standard def digital and a switch to more set tops that can send HD signals out to a standard def box.

No matter what, it's still way too soon to tell who is going to win.. hell, people said Satellite was going to win years ago.. however, really, when you look at it, it's more of a leapfrog game where there really is no "winner".. just someone who's moved into the front position again.

Fur It Up

Portland, OR

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reply to chasmn

Re: No money for them

said by chasmn :

bailout is different than encouraging them to service less profitable areas. Last I checked they are still a business!
The last business that was "encouraged" to serve less profitable areas was the mortgage companies, look what it go us.

220, 221, Whatever It Takes.

1 edit

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reply to hottboiinnc

Re: skip out

not if youre in canada. they have colours there too...and even humour, im told.


Spencer, MA

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reply to MyDogHsFleas

Re: The problem is right here:

Yes, Communism didn't work out too well, but don't be so sure to think the final verdict is in on our current system.
It's not a question of either having communism or the system that we have now. Allowing corporations to merge and merge and merge and buy the government (i.e. Citizens United Supreme court decision) is pretty much as dangerous to our democracy as having the Politburo set up in DC. Please remember that corporations like Verizon have lobbied in several states to make it illegal for communities to roll out their own internet access. It's not simply a matter of personally not having FIOS available at my address. It's what's happening with our education system, food system (check out the news today for a story on how Monsanto is manipulating the price of seeds for farmers). It's our banking system, our labor system. Decisions being made now in the Boardrooms of the corporations are indeed very seriously endangering the democratic ideals that I think most associate with this country.


Spencer, MA

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reply to axiomatic

The problem (among others) is that in the current US Corporate Structure short term profits is the only goal. The current Corporate system is destroying this country like a cancer.


Tomball, TX

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Let's talk about this quote right here as I see this being the problem with almost ANY ISP we talk about in these forums.

"Seidenberg, the driving force behind the first wave of FiOS, is on his way out -- and his replacements aren't quite as bullish on angering investors for the sake of this whole "future" thing."

Explain to me again why investing in the future of a companies infrastructure is angering to the shareholders? Yes their short term profits are a little smaller because of the investment, however the continued success of the company doing the investing on the future overall infrastructure ensures that the company (and it's stock) STAY on top permanently.

Mark my words... now that Verizon has stopped investing in the future of their network, this is the time that Comcast and others have to make up the difference and could eventually pass Verizon in the long run race.

Again its always the companies fear of their shareholders screwing things up for overall company growth. Don't get me wrong, I am an investor myself, but I have the where-with-all to invest in companies making sound long term decisions about their infrastructures (whatever they may be) and avoid these companies looking for the quick fix like the plague.