& cplSiteName &

Verizon to Pump $18B Into FiOS by 2010

Light Reading
News Analysis
Light Reading
9/27/2006
50%
50%

In demonstrating renewed confidence in its FiOS fiber-to-the-home (FTTH) initiative, Verizon Communications Inc. (NYSE: VZ) says its fiber-based service will become profitable after four years -- and the carrier vows to boost its investment in the market to $18 billion by the year 2010, at which point it expects to have 7 million customers using FiOS for Internet access.

The $18 billion figure is the largest public number Verizon has released to date, but it's unclear whether it represents a change from the carrier's internal growth targets. In the past, Verizon has avoided talking specific long-term investment numbers, preferring instead to update the details of its FiOS expansion in short-term stages. (See Verizon Updates on MCI, FiOS, Verizon FTTP: Plenty of Exits, and Verizon's Elby: IPTV Could Take Years.)

"It's really an acceleration," said Virginia Ruesterholz, president of Verizon Telecom, at a presentation Verizon gave to investors this morning.

Verizon officials say the revenue growth opportunities for FTTH and the declining network costs make the project worthwhile. The investment in a fiber service will turn profitable after four years, the company contends.

So far, Verizon has shown impressive progress in infiltrating the video services business and ramping up its FTTH services, say some analysts.

"Verizon's relatively pragmatic architecture, compared with pure IPTV, has enabled them to scale video subscribers much faster than their telco peers and compete with cable more effectively as a result," says Rick Thompson, a senior analyst with Heavy Reading. "At the same time, they've been able to deliver an advanced feature set on top of the platform (multi-room DVR, HD, media manager, widgets, etc.) that will continue to evolve."

Verizon claims more than 500,000 FiOS customers with 5 million homes passed by fiber. Its year-end target is 6 million homes passed. Verizon says of those 500,000 users, it expects to have 175,000 of them using a video service by the end of the year.

The company sees that the FiOS services becoming profitable within four years of initial investment, which may be boosting its desire to spend more money. The $18 billion in net capital Verizon says will be invested in total from 2004 through 2010 does not include $4.9 billion that would otherwise be required to maintain traditional copper plant during the same period.

Verizon said it expects this investment to result in 7 million FiOS Internet customers and up to 4 million FiOS TV customers by year-end 2010.

“We see this as a great growth opportunity to grow profitable revenue,” said Ruesterholz. “We know the market is changing from narrowband to broadband… I feel the network is future-proof.”

Ruesterholz said Verizon has been encouraged by a low 1.5 percent monthly churn rate among FiOS customers. The initiative is also important because of its potential to develop new revenue from additional applications such as video-on-demand and gaming.

The video portion of the network is progressing on schedule, said Ruesterholz, with more than 200 video service offices. In addition, Verizon currently holds 161 local video franchises -- more importantly, Ruesterholz says that local franchise regulation is not slowing deployment of the service down.

”We had to learn if this was going to be an issue," she said of local video franchise regulation. "This isn’t holding us back in our deployment of video.”

Verizon said the migration to a fiber network will also result in $1 billion in savings in annual operating expenses by 2010. Capex costs are also declining, according to the company. Average capital expenditures to pass a home were $873 in August, less than the previously announced year-end 2006 goal of $890. The new year-end target is $850 per home. The cost to connect has declined from an average of $1,220 in January 2006 to $933 in August, but that was higher than the announced year-end 2006 goal of $715. The new year-end target is $880 per home in connection costs, Verizon said.

Verizon shares edged slightly lower on the news, dropping $0.36 (0.95%) to $37.61 by 11 a.m. ET.

— R. Scott Raynovich, Editor in Chief, Light Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
straight shooter
50%
50%
straight shooter,
User Rank: Light Beer
12/5/2012 | 3:39:36 AM
re: Verizon to Pump $18B Into FiOS by 2010
I have 15Mb FIOS service and it works great (they are using a Tellabs/AFC terminal on the side of my house and a Linksys/Cisco router inside).

Unfortunately I also purchased Verizon Voicewing (their VOIP service) at the same time. It frankly does not work. Well it worked up until one month ago then I began experiencing non-completed calls (signaling will dial, end party will answer, no voice channel established). This happens consistently on 2/3rds of our outbound calls (two phone adapters in my home). Also in about 1-in-10 calls I am bridged into another persons (already established) call!?!!! After one month, eight calls and multiple hours of troubleshooting with Verizon there has been no improvement, in fact, it has probably gotten worse over time.

I just wish Verizon could get use a bit of that $18B(!) to get their VOIP service right.
optodoofus
50%
50%
optodoofus,
User Rank: Light Beer
12/5/2012 | 3:39:27 AM
re: Verizon to Pump $18B Into FiOS by 2010
Voicewing isn't really a Verizon service; they just resell someone else's VOIP. (Delta3, I think). The only motivation for Voicewing is to be able to say they have a presence in VOIP, but they don't really spend any money on it for marketing, support, etc. Given the complete lack of focus and investment, I wouldn't touch Voicewing with a ten-foot Ethernet cable.

optodoofus
Featured Video
From The Founder
Light Reading is spending much of this year digging into the details of how automation technology will impact the comms market, but let's take a moment to also look at how automation is set to overturn the current world order by the middle of the century.
Flash Poll
Upcoming Live Events
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 2, 2017, 8 Northumberland Avenue London
November 10, 2017, The Westin Times Square, New York, NY
November 16, 2017, ExCel Centre, London
November 30, 2017, The Westin Times Square
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Muni Policies Stymie Edge Computing
Carol Wilson, Editor-at-large, 10/17/2017
Is US Lurching Back to Monopoly Status?
Carol Wilson, Editor-at-large, 10/16/2017
'Brutal' Automation & the Looming Workforce Cull
Iain Morris, News Editor, 10/18/2017
Pai's FCC Raises Alarms at Competitive Carriers
Carol Wilson, Editor-at-large, 10/16/2017
Worried About Bandwidth for 4K? Here Comes 8K!
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 10/17/2017
Animals with Phones
Selfie Game Strong Click Here
Latest Comment
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed
Partner Perspectives - content from our sponsors
The Mobile Broadband Road Ahead
By Kevin Taylor, for Huawei
All Partner Perspectives