5:00 PM -- If we're to take Eric Schmidt at his word, the Google Fiber project in the Kansas Cities is so much more than that.
"It's actually not an experiment; we're actually running it as a business," the Google (Nasdaq: GOOG) executive chairman said Wednesday at The New York Times's Dealbook Conference, noting that the company hopes to bring its fibery goodness to "more cities."
I take that to mean that Google Fiber's goal is not to see how much money it can flush down a black hole. After all, he's in charge of running the Google business, so I wouldn't expect him to say anything different. But it's also too early to say if Google's demand-driven deployment approach will turn out to be a viable moneymaking venture. It's just now starting to get paying customers. (See Google Fiber Starts to Hook Up Customers and KC Gets Google Fiber for Real in October.)
But I certainly wasn't surprised that Schmidt didn't go out of his way to also volunteer that Google has a nifty out clause if things go south or it simply decides it would rather hand the keys over to a "third party." (According to its agreements with the cities, Google can terminate its deals two years after it started building the networks in Kansas City, Kan., and Kansas City, Mo.) (See TWC Wants Piece of Google Fiber's Sweet Deal .)
Considering the projected costs, it's highly unlikely that Google will ever replicate what it's doing in Kansas City on a national scale. But if the effort in the Kansas Cities does end up making business sense, we already know that hundreds of cities would line up to give Google a shot at another sweetheart deal. So I would not put a new, one-off Google Fiber project beyond the realm of reason. (See Googlemania!)
But until Google proves that its fiber ambitions extend beyond the Kansas City region, the threat to cable operators is mostly empty. That means that the MSOs don't have to go out and deploy 1Gbit/s Docsis 3.0 technology tomorrow. But it does prod them to at least keep their foot on the gas and have it ready to roll once there's real demand for it. (See Google's Pointy Stick and More Docsis 3.0 Gateways Gun for 1-Gig .)
I started with comcast for cable, direct tv for television, and verizon for phone. I later switched to the verizon fios triple play when fios arrived. The quality was great and the home media center dvr was nice. The biggest problem was price. Once you get past the first special 6 months or one year deal the price creeps back up and up and up.
Now I have comcast just for internet, magic jack for home phone and I just use free over the air antenna and internet services through a blue ray player and roku box. Even with Netflix, Hulu Plus, and Amazon Prime my montly is less with this combination then it was with verizon.
Comcast internet performance has been pretty good so far. Once their teaser rates expire, I will probably jump back to fios for just internet and their teaser rates.
Fun side bit: the comcast guys made sure to cut every piece of coax and fibre that wasn't theres. I barely managed to keep my antenna hooked up.
Verizon did not sell either Southern California or Florida. In fact, their highest penetration was in Southern California. There was some FiOS sold to Frontier and to Fairpoint. But a very small amount.
And the ROI was less than 2 years by their business plan in urban and suburban areas. You have missed 2 major factors in the business case:
1 - They stemmed line loss dramatically. In fact that bit alone against Cablevision, justified FiOS.
2 - They reclassified jobs in the union to (over time) lower the workforce. It used to take 4 different folks (by union rules) to install a telephone line. With FiOS it is one. This is just the install and does not include the provisioning folks.
Now, Verizon identified up fron the size of FiOS and announced that they would sell the rest of the lines over time. If you are in a non-FiOS Verizon property, they will eventually sell you.
Now, because you seem to act like they did 3 lines. I know for a fact since I was in AFC and Tellabs at the time that they installed 3500 BPON OLTs. That was before they started installing GPON. Each one of those BPON OLTs could support 50 PONs of 32 customers. So, BPON alone represents a possible 5.6M homes passed and I know that they installed over 3.5M BPON ONTs. From the Q3 presentation they have 5.3M FiOS installations and 4.6M of those are video subs. Both were up over 100K in Q3. The original hope at the beginning of FiOS was to get to about 7.5M subs. So, they have come close to their goal and have done very well financially with it. Remember the PLAN was about 1/2 of Verizon's 15M lines would be FiOS. They are getting there.
You are extrapolating that to...well they should do rural as well. Well, it turns out NOBODY that is not subsidized does rural. Not even cable. They don't do 100Mb/s D3 in the middle of nowhere either. No business case for it.
"The only question is the time for recoup of the investment cost." But that is essence of the problem. ROI. It takes so long with fiber deployments for residential services that it makes for a dodgy business model for a public/private company.
A lot of the FiOS they sold was not rural.. SoCal, Washington, Oregon, FL. And they never really penetrated the urban centers. They did the suburbs around the major NE cities. They stopped the deployment as planned. No argument but they aren't going to do anymore. Its over. The Fairpoint sale was all copper lines so I didn't see any reason to mention it. Fiber is the way to go but its expensive to deploy and difficult to get a ROI in the time frames that private/public companies want to see. I applaud Google but, IMO, its a science experiment in KC.
Verizon published that plan BEFORE FiOS started deploying. The plan from 2003 on has been urban/surburban FiOS and dumping rural properties. By the way, you missed their sale of a bunch of lines to Fairpoint before the Frontier transaction.
Not sure how you can claim something that was planned AND publicly announced BEFORE a buildout started.
Every quarter Verizon (like every other service provider) publishes subscriber number and does so for FiOS in particular.
You are very wrong if you think Verizon is losing money on those services. The only question is the time for recoup of the investment cost.
Your experience is your experience. But you can look at all service providers provide numbers. The best way for you to look at Verizon is to go to the investor portion of their website and look at the presentations that they put up there. You can also listen to their conference calls.
From their Q3 presentation (page 12)...."Highest Y/Y Consumer Revenue Growth in 10 Years". Since you don't seem to follow the lingo, Y/Y means Year over Year (i.e. growth in the past 12 months).
Unless you want to claim they are lying in their public statements and filings then you probably want to revise your views.
One more thing.The cable MSOs,especially Comcast, are now involved in a lot of R&D in both hardware and software, the X1 platform is one of the many. Verizon is tied to Motorola and Actiontech platforms with little or no innovations of their own.The cable company's hybrid architecture is so versatile... they it can incorporate Wi Fi hotspots, extend fiber to businesses in the form of metro ethernet,and soon to come, fiber to the home for those who want to pay for that service.Now, is it any wonder why Verizon has now adopt the "can't beat them,then join them", by halting further expansion of FIOS and opted for collaboration with cable MSOs ?
VZ cherry picked areas to deploy FiOS. They never attempted to deploy where there were any challenges. They sold off all the FiOS buildouts outside of the NE to Frontier. And then they stopped. They shut it down. They are backfilling OLTs now but if it was such a great business model they would have continued. Its not except for certain prime areas and they covered most of them already. And if they have to rebuild as in the case of post-Sandy construction of course they will lay fiber. I think the technology is great be it PON or active Ethernet like Google is deploying. But overbuilding the entire country with fiber is simply not something the private sector is going to do. Unless the government moves on it we will be behind most advanced countries with regard to Internet access speeds. Japan has 100Mbps full duplex fiber service in the major cities in 2003. For $40/month.
"You can look at Verizon's published case numbers".I'm not exactly sure what you meant by the statement, and maybe I have to consult Rosetta Stone for it's interpretation on what you just wrote! Suffice it to say, you're going by some fictitious report you read, but I'm going by reality.....my own observation in the field.I've seen Verizons sub that they have gained in their initial deployment of FIOS, but of late, they have not published how much they've lost. In Lower Merion, PA, where I worked, which is also the third riches area in the US, the residents there did not flock to FIOS,and who did, came right back to Comcast within a matter of months.Also, many apartments in the area are already wired for FIOS and both old and residents aren't showing any interest in getting FIOS. If you want to talk numbers, then you will see the trend for basic video subs is trending upwards, digital subs may have plateaued,but highspeed Internet and business class services are growing exponentially.Verizon is losing money on their traditional wireline and FIOS.The main thing that is keeping their boat afloat is their wireless subsidiary and oceanic fiber to other nations.
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