The Costs of Broadband War 'The yawning capital-spending gap' between telcos and cable Broadcasting and Cable compares the amount being spent for upgrades by Verizon and Cablevision to compete for consumers in the next-gen broadband battles. According to the report, Verizon is paying $1,100 in capital for each home “passed” by its new FiOS TV optical-fiber systems, and another $700 to connect the home. Cablevision meanwhile is paying $15 per home passed, and each new phone customer cost around $200.
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 | | Just Goes to show..... it is all about MONEY..... | |
|  |  SteveI know your IP addressConsultant
join:2001-03-10
Yorba Linda, CA
kudos:5 | Re: Just Goes to show..... Why should it be about anything else? | |
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 fcislerPremium
join:2004-06-14
Riverhead, NY | Unfair Comparison Very unfair comparison, IMO....
Cablevision has 99% (don't want to say 100...) coverage throughout NY (long island, at least).
Verizon, while their phone service may also cover 99%, is running a whole new infrastructure.
Cablevision has to drop cable from an existing node to your house and plug you in. Verizon must run fiber to your house, then connect it with their "node"...if that node exists.
While cablevision allready has thousands of miles of fiber, and a s*itload of coax running, verizon must re-vamp their infrastructure.
Verizon is also "futureproofing". Once the fibers there....how much more work do they have to do to bump up the speeds? Right now, fiber IS the fastest medium. They may have to upgrade their equipment in the future....but they are one step ahead of cable...
Cables also a proven technology....but light > RF. Sure, cablevision could go with NARAD and deliver 100/100....but what happens with those end users who could never achieve 15/2? The NARAD will still use the same 1 - 20 year old cable hanging on the poles.
Now that same user goes over to FIOS...they are on a new clean fiber...which service suits them better? FIOS, of course.
Even the non technical...it's a matter of works or does not. | |
| | | | Re: Unfair Comparison said by fcisler:Very unfair comparison, IMO.... Verizon, while their phone service may also cover 99%, is running a whole new infrastructure. BINGO!!! While Verizon is almost starting over (replacing that decades old copper) Cablevision already has a lot of there infrastructure in place.
I wonder how much it cost the cable companies in the beginning when they first laid their lines. | |
| | |  sporkmedrop the crantini and move it, sisterPremium,MVM
join:2000-07-01
Morristown, NJ
 ·Optimum Online
| Re: Unfair Comparison said by moonpuppy:said by fcisler:Very unfair comparison, IMO.... Verizon, while their phone service may also cover 99%, is running a whole new infrastructure. BINGO!!! While Verizon is almost starting over (replacing that decades old copper) Cablevision already has a lot of there infrastructure in place. I wonder how much it cost the cable companies in the beginning when they first laid their lines. Cablevision is simply being smart. Coax has lots more life in it, and they are able to incrementally (affordably) push fiber further out without breaking the bank. Verizon stuck with an old, much more limited infrastructure longer than they needed to and now they are paying.
There's nothing wrong with being smart. The majority of FIOS subs are going to be taking the cheap tier, and CV can easily compete with that. The "power users" win, but they are the money losers for either company...
And I'm sure running the initial coax was still much cheaper than VZ's all new fiber runs/installs.
Incremental upgrades are going to be much more cost-efficient now and in the long term.
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Day dreaming days in a daydream nation | |
| | | | Ahrenl
join:2004-10-26
North Andover, MA | Re: Unfair Comparison It's Verizon's/telco's own fault. They could have been upgrading since the 80's. Now they have to do it all at once, and it costs a lot to rewire an entire continent. Not to mention all the over paying that went on with merger mania. Their depreciable asset accounts are hugely bloated, whereas many cable companies didn't go that route. | |
| | | | |  calvoiper
join:2003-03-31
Belvedere Tiburon, CA | Re: Unfair Comparison I don't see that it's either "fair" or "unfair". These are companies coming from different backgrounds competing for users of a similar product.
It's like saying that gas stations have an unfair advantage over grocery stores selling milk. Who cares? Either way, it means that I have an additional choice when I'm looking for cheap, convenient milk. (And if it stops the grocery stores from playing the d*mn trick of putting the milk in the back so I have to walk past the candy and pastries to get it, all the better.)
The article, however, is commendable for putting relatively hard numbers on the process, and for pointing out that it's the satellite companies, not the cable guys, who are taking the early hits.
calvoiper
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VoIP--the death knell of remaining voice monopolies! | |
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| | |  53059959Temp banned from BBR more then anyone
join:2002-10-02
PwnZone | the telco's are doing it now because they have a reliable cash cow (cellular) versus cable. at&t has cingular, verizon has verizon wireless. | |
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| |  N3OGHYo Soy Col. "Bat" GuanoPremium
join:2003-11-11
Philly burbs
kudos:1 | Exactly.
Or, another way of looking at it. Verizon has been making good money on an infrastructure that was paid off decades ago. They can milk that cash cow in order to build their new network.
I don't see either in a genuine position of superiority at this point. Verizon still has their copper infrastructure in place, and are building what is IMHO a superior technology to cable's infrastructure. Coax is much more costly to maintain than FTTH (once actually installed), and is much easier to upgrade for future use.
Besides, when Verizon finishes their fiber roll out, they can sell off the old copper plant, and make a quick buck at the end of it all.
With VoIP and wireless phones having pretty much universal coverage in most areas, Verizon is smart to push on with Fios. Someone with vision at that company realizes that to make it in the future, they're gonna alive to offer more than just a phone line and some DSL coverage.
Fios is Verizon's future. Without it, they will too far behind to compete..
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Never ask what sort of a computer a guy drives. If he's a Mac user, he'll tell you. If not, why embarrass him? -Tom Clancy | |
| | | | DonLibesPremium,ExMod 2001
join:2003-01-19 | Re: Unfair Comparison There are some good points to your analysis but ....
1) Verizon's so-called cash cow is getting stripped by the likes of Vonage as well as Verizon's own VoiceWing.
2) How does Verizon "sell off the old copper plant"? I can't imagine anyone buying it, in the ground anyway. For scrap, I have no idea if it's worth the effort. Do you? | |
| | | | | fiberguyMy views are my own.Premium
join:2005-05-20
kudos:3 | Re: Unfair Comparison Verizon is being stipped by the likes of vonage because they didn't wake up and smell the coffee years ago.
They, and all of ma bell, hid behind their own cockyness and sat back and said things like "cable is not a threat to us" and "vonage is no threat"... well? It's a threat.. now they are scrambling.
Funny too.. the very thing that the bells did by thumbing their noses at impending competition is the very thing Brian Roberts of Comcast just recently did, only I never heard anyone here give the telco company crap over it like they are Brian.
(don, this post is not meant to be a direct dig at you.. just adding to your post and adding another thought) | |
| | | | | | rradina
join:2000-08-08
Chesterfield, MO | Re: Unfair Comparison With regard to Vonage, not only are they scrambling but one of the AT&T head honchos said he's tired of Vonage "using his lines for free." He's trying to convince our legislators that somehow Vonage is getting a free ride and that they should not vote for net neutrality. If the backbone providers have their way, Vonage will be paying $10/month per customer to the backbone providers and then their prices will be "competitive" with regular telcos.
If net neutrality becomes law, I would look for voice and possibly even video communications to become essentially free. Right now Vonage's big play is that they connect VOIP users to the traditional POTS system. Once VOIP is in the majority, look for that interconnect to become increasingly less valuable. Once almost everyone is VOIP, you won't need Vonage in the middle and voice will be free just like Skype is today between all VOIP customers. If this happens, the ILECs will no longer have voice business.
The next industry to suffer will be wireless cell carriers. If WiFi becomes pervasive and continues to advance both speed and the reliability, VOIP wins again. The cellular carriers will also become "dumb" pipes as folks use it for mobile Internet access over which they use VOIP to make their calls.
What we have now is a panic and everyone is trying to figure out how to get their meat hooks into regulation or lack thereof so they can leverage their monopolies to stay in the game. | |
| | | | | | | | said by fiberguy:Funny too.. the very thing that the bells did by thumbing their noses at impending competition is the very thing Brian Roberts of Comcast just recently did, only I never heard anyone here give the telco company crap over it like they are Brian. I have given grief to Ma Bell on more than a few occasions.
I have repeatedly said that if the phone company had done ISDN (and later DSL) right, that there would be no other competition. Much like Microsoft, Ma Bell mis-judged what the internet has become.
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| | | | N3OGHYo Soy Col. "Bat" GuanoPremium
join:2003-11-11
Philly burbs
kudos:1 | said by DonLibes:There are some good points to your analysis but .... 1) Verizon's so-called cash cow is getting stripped by the likes of Vonage as well as Verizon's own VoiceWing. 2) How does Verizon "sell off the old copper plant"? I can't imagine anyone buying it, in the ground anyway. For scrap, I have no idea if it's worth the effort. Do you? Point 1: Very valid point. But, even though VoIP is taking a decent amount of money away from Verizon, they're still making good money off the system they have in place. Of course, Verizon is also making money off their own VoIP offering.
2: I can't offer specifics as to who would want to buy Verizon's copper plant. Some of the 3rd party companies that market phone service over the current copper may have some interest. Either that, or tear the copper down and scrap it. Copper is worth a lot of money on the recycled metals market....
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Never ask what sort of a computer a guy drives. If he's a Mac user, he'll tell you. If not, why embarrass him? -Tom Clancy | |
| | | | | | wev567
join:2006-02-25
Pittsburgh, PA | Re: Unfair Comparison Copper is about $3.30-3.50 a pound on the commotities market right now. what scrap sells for? BTW, the phone company abandons direct buried cables, since it's not worth the manpower to dig up.
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| | | | | | | Ahrenl
join:2004-10-26
North Andover, MA | Re: Unfair Comparison That's several times what it was worth a year ago. If the commodities rally continues (as many think it will do to the rapid emergence of India, China, etc.) it may very well be worth it to sell it off. I know there is a company making piles of money doing this with scrap silver. They buy it all from manufacturing companies that were spending money disposing of it, and sell it all on the commodities markets. They're generating piles and piles of cash (believe they just IPO'd a few months ago) and they essentially just sell contracts, and run trucks.  | |
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| fiberguyMy views are my own.Premium
join:2005-05-20
kudos:3 | I don't see how this is unfair. Besides, phone doesn't want to play on a level playing field.
Please tell me how many times cable has basically rebuilt their networks? Now tell me how many times phone has rebuilt theirs?
There are always going to be differences in the mediums but in the end it doens't matter. As Joan Crawford once said "No one ever said life would be fair Christina.. I'm bigger and faster and I'll always beat you"...
As said many times before, while phone was asleep at the wheel miling their customer base for all they could, cable was out there looking for something bigger and better. Cable has done what phone SHOULD have done years ago, and didn't. Cable has been looking for ways to deploy more services.. and when they do, it's to their entire city foot print - always has been. Phone? Let's say.. in order to get caller ID or Call waiting, I had to change my phone number becuase my prefix wasn't capable. Instead of 929, I had to get a 928 number. Why? They didn't update their entire network. That went on for about 4 years before 929 was updated with the same equipment.
Fiber has an advantage over cable.. hell, cable uses fiber. But, cable built a pretty good network and has expanded that network MANY times over the last 30 years.. love or hate cable, you have to give them credit for it. And if you don't, then it just shows bias and that's fine for you if you have it.. but the FACT remains) Phone? Same old copper.
Today, we talk about fair, but phone wants to have their cake and eat it too. While phone was secure, cable had to jump through many hoops, take on much cost, and build from the ground up. Now phone is finally seeing the threat.. many of them, instead of improving their CORE service would rather get into video. Why is that? What is phone doing to improve their voice quality and in many areas, their reliability?
I just don't see this issue or story as unfair.. it's just showing some facts. | |
| |  morboComplete Your Transaction
join:2002-01-22
00000 | we have a winner.
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no sig | |
| | wentlancYou Can't Fix Dumb..
join:2003-07-30
Maineville, OH | said by fcisler:Very unfair comparison, IMO.... Cablevision has 99% (don't want to say 100...) coverage throughout NY (long island, at least). Verizon, while their phone service may also cover 99%, is running a whole new infrastructure. Boo F'n hoo. We want to provide a service, but it is unfair because someone esle is doing it cheaper?!?!
Spin it like this...
10,000 years ago, there was no Verizon or Cablevision, and there was no copper or fiber cable. Now we have all of that. So it is perfectly fair. They all started with nothing.
They have to make their ends meet. Suck it up.
puritan | |
|
 RickPremium,MVM
join:2001-02-06
Waterbury, CT | I recently read somewhere where Verizon said that they're saving a lot of money on the back end in areas where they're rewiring with fiber.
They said service calls are down very significantly in the newer wired areas.
And so, really to arrive at a fair comparison, I think that has to be taken into account too.
Just one or two truck rolls to a house costs a lot of money too.
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The life you help save just might be your own Team Discovery | |
| |  NightfallMy Goal Is To Deny YoursPremium,MVM
join:2001-08-03
Grand Rapids, MI
 ·Site5.com
·Comcast
 ·Callcentric
| Re: I recently read somewhere said by Rick:where Verizon said that they're saving a lot of money on the back end in areas where they're rewiring with fiber. They said service calls are down very significantly in the newer wired areas. And so, really to arrive at a fair comparison, I think that has to be taken into account too. Just one or two truck rolls to a house costs a lot of money too. Yea, but do the costs of rolling a truck out there make it cost competitive to run fiber all over the place and light it up? It sure would be nice to see that fiber deployed all over the place, but Verizon and the other telcos just don't have the money for that kind of deployment.
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My Domain
Nightfall's Hockey and Life Journal | |
| | | Ahrenl
join:2004-10-26
North Andover, MA | Re: I recently read somewhere Obviously they think otherwise. I'm liable to believe them over you, and frankly, their balance sheets support that they do have enough money. Especially since they've been milking the copper networks for decades. | |
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| | | | Re: Here is why FIOS isn't more widespread said by Nightfall:Daydream time: Man, wouldn't that be nice? A housing community for BBR users. Mmmmmmmm. You say that now, but I bet you'd change your tune if you had Taylor the Troll living next to you. 
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I subscribe to the theory of intellectual osmosis. Unfortunately, I must now cease our conversation and move away from you before my intelligence begins to drop. Good day. | |
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| Reviews:
·Optimum Online
| I spoke with a Verizon Tech regarding FIOS. He told me that my development on the border of Manalapan/Englishtown in NJ may not have FIOS for a couple of years as our cables are buried. Meanwhile, other areas in Englishtown already have FIOS available and installed. So they are definitely being selective as to where to install first. The tech said that Verizon want to recoup some of their losses before spending the money to dig up streets. The ironic part my development would make 200 plus users able to connect to FIOS if they ran the wire. Oh Well!! Guess I'm stuck with cable for now. | |
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 JTRockvilleData HoPremium,MVM
join:2002-01-28
Rockville, MD | $1,800 per television subscriber is a bargain Don't television subscribers on HFC plants generally go for around $3,000? | |
| | | | Re: $1,800 per television subscriber is a bargain This is true (told from the Adelphia debacle) but you need to look from WHERE a company such as Verizon's customers are coming from... companies like Cablevision are NOT going to just sit there and let marketshare slip away..! However, looking at the pure numbers, its much, much cheaper to take business away from satellite tv providers than it is other cable companies (provided the cable companies aren't shooting themselves in the foot by not innovating and competing, or ahem, cough cough, RAISING prices).
The next turf war really begins at the end of the year 2006, to Q1 2007, to see which, if any cable companies RAISE their rates. Lets not forget its not purely a broadband war, its a war for VIDEO and value-added wired/wireless voice & data as well now. See other threads about the alliance between sprint & cablevision.
Now if I were a TRUE cynic, I'd believe that satellite providers are dirtying the waters a-bit with subtrofuge and piracy of their own networks (aka FTA access and grey market cards/hacking) as a stop-gap measure, if you can't keep customers why let someone else profit from them when you can figure out a way to bring those people back into the fold later-- or make like a weasel (RIAA) and sue them later. Nothing happens in a vacuum without thought, reason or rhyme. | |
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 gwionwild colonial boyPremium,ExMod 2001-08
join:2000-12-28
Pittsburgh, PA
kudos:1 | musings from the front... ... well, remember, refitting a cable system to carry voice isn't a huge effort. The bandwidth's there in trumps. Refitting a voice network to carry video is a much bigger effort. There are areas in every telco's territory in which the system literally amounts to a set of tin cans and a string, and it works, famously. For voice. Even, miracle of miracles, for DSL - at least, the minimal level of service.
The problem's data and video. What we refer to as "speed" is really "capacity". At some point, a cat whisker of copper - 90% of the non-trunk telephone system in America - max's out. Cable built their systems between the sixties and nineties; telephony has miles of plant built in the first half of the twentieth century. That was built with the idea that, if ever any sort of video would ever travel the system, it would be, at most, the quaintly archaic "video-phone" idea. And America's never embraced that idea, outside of coporate conferencing.
It's a new era in communications, and the telcos have to play catch up to compete. It's money well spent, in my opinion. Cable can afford to drag their feet, have a shorter term vision, for now - and, naturally, show a better shorter term margin. Telcos have to think longer term. In the long run, telcos have to future proof their investment. It's going to be huge, any way you look at it. Better to spend an extra billion or so, now, than an extra ten billion, ten years out. Long term investment versus short to mid term one. That simple.
In essence, both industries are doing what they should be doing... telecom is making a long term investment, hoping to recapture the costs of this build over decades, while cable is playing close to the chest, and planning to accumulate profits to finance their own long term ivestments. Which will be inevitable. In a sense, they'll have an advantage, in fact, since their systems can already, mostly, carry the current loads, so they'll upgrade basic hardware and plant for a while, then reconoiter the business situation, and deploy next-gen tech as it best serves their strategic business plans. Telecom has to upgrade plant or fall by the way, here and now... better to upgrade into a 100 year infrastructure, then, than a 20 year infrastructure.
Cable or not, there comes a point at which telecom has to upgrade their infrastructure - the point, pretty much, is now.
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Oh no, you cannot tell a gypsy...
ooh, that (s)he's no longer a member
Become a deadly weapon now...
along with everything else
Oh call my name... | |
| | | | Re: musings from the front... Couldn't have said it better myself.
The phone companies saw no reason to upgrade for decades and now they have to not only fix, but upgrade as well. The copper setup they have now was never designed to hold as much data as we are passing through it. | |
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ricep5Premium
join:2000-08-07
Jacksonville, FL | Look at the numbers $1800 a sub is easy work financially.
30 year bonds are supporting that build out.
That's $60/year in allocated capital per sub. (not including depreciation, inflation, interest)
The average FIOS sub draws about $100/mo in revenue and with a average PM of 34% per sub monthly, we are talking approx $400 a year of revenue that can be allocated to bond payments per sub, per year.
Looking at it another way, Verizon can get a FIOS hit rate of 1 in 6 homes and still make their bond obligations.
I don't know who these short termers are who are complaining, but the numbers are looking very, very good for Verizon. It also exposes the fact that the margins in cable are so high now, that they are allowing new entries into the market.
While its easy to say the telco's have never invested in infrastructure historically, they actually have placed alot into it. Their fiber to the node build outs have been going on since the 80's when it became technically feasible (read: cheap) to deploy in the field. They just avoided last mile since it was too expensive. By adding video and internet to the equation, now it makes sense financially. | |
| | | | Re: Look at the numbers As the telcos' fiber deployments increase and the technology builds a good track record for reliability, they'll also be better positioned to provide services for businesses. AFAIK cable companies haven't had much success in this area. | |
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| | Let's not forget the handouts! The Fed gives all these giant telco's and cable companies HUNDREDS OF BILLIONS of dollars in funding and breaks. Has since the 90's all in the vain hope they will provide universal access. Instead it's all been spent on big cities and subsidizing their bottom line, while many areas still have nothing more than dialup. | |
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