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Verizon's FioS Deployment Enters A New Chapter
Carrier will likely pause deployment to market to existing footprint
by Karl Bode 11:11AM Friday Oct 30 2009
Earlier this week we noted how Verizon's quarterly subscriber additions for their fiber to the home FiOS service were lower than anticipated. The company added 191,000 new FiOS subs on the quarter, down from the 300,000 added in the second quarter. According to Verizon, they're blaming the lower additions on "marketing campaigns that didn't work" -- though who knows which efforts failed, given Verizon does everything to promote FiOS from throwing local ice cream parties to ads taking jabs at the cable man.

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As Verizon reaches the end of their initial $23 billion deployment wave, it's becoming pretty clear the company is going to slow new deployments and spend more money on marketing to existing deployment regions. Verizon's existing copper network covers some 32 million households.

According to the company's fact sheet, 14.5 million of those homes are "passed" by Verizon FiOS (note that this doesn't necessarily mean they're "served" by Verizon FiOS, or have an actual connection to their home or neighborhood). 3.3 million of Verizon's 32 million households actually subscribe to FiOS service.

I've always wondered where Verizon would draw the line in terms of which markets were worth upgrading to FiOS, and it appears we'll find out over the next few years. For now, it appears a brief deployment rest is in the cards. Chatter from Verizon and municipal employees in several states (CA, MA, NY, PA) suggests that Verizon is halting the negotiation of new FiOSTV franchises, which indicates they'd like to recoup some money from their existing deployment before moving on to new markets.

That of course makes sense, but it creates a lot of uncertainty about what happens next. Investors will now worry whether Verizon can hit growth targets without overspending on marketing. Consumers in Verizon DSL markets will now worry whether they'll ever be upgraded, or if they're part of Verizon's fairly massive effort to sell off those markets deemed unworthy -- most of them rural. Some of these questions should be answered early next year when Verizon announces what the next FiOS chapter entails.

Update: AdAge has a lot more interesting detail on why Verizon's marketing efforts for FiOS during the last quarter didn't quite resonate with consumers during a recession.

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