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Verizon's Copper Migration Will Be Slow Going

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
1/22/2013
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Verizon Communications Inc.'s move to kill off some of its copper footprint could be a slow process, it emerged on Tuesday's fourth-quarter earnings call. "In wireline we are focused on moving customers to fiber-based assets," Verizon CFO Fran Shammo said on the call. This is no surprise: The operator revealed in December that it wasn't replacing copper lines damaged by Superstorm Sandy. "Copper does not mix with water ... fiber optics doesn't care if it's in water," noted the CFO on the earnings call. The transition from copper to fiber in areas where FiOS is available, however, will be a long-term process. Shammo said Verizon hit its target of 200,000 customers moved in 2012 and that "our target is 300,000 this year." Verizon currently still has some 3.3 million customers on copper. So it will be a long-term process for Verizon to actually see all the savings it gets from not operating copper, particularly as its FiOS footprint in the U.S. is by no means comprehensive. The company is hoping to persuade customers not covered by fiber to move to 4G instead. On the call, Verizon said it now has 4G LTE in 476 markets in the U.S. and covers more than 273 million potential customers. It hopes to complete the 4G rollout in 2013. The numbers
Verizon posted a loss of US$1.93 billion for the quarter (because of damage from Superstorm Sandy and one time-costs associated with pension liabilities) on revenue up 4.5 percent at $30 billion. This translates to loss of $1.48 per share, compared with a loss of $0.71 per share a year earlier, when it reported a net deficit of about $212 million. Excluding the one-time items, Verizon had a profit of $0.38 per share. Analysts polled by Reuters expected a profit before one-time costs of $0.50 per share on revenue of $29.83 billion. — Dan Jones, Site Editor, Light Reading Mobile

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Dan Jones
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Dan Jones,
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1/24/2013 | 9:08:21 PM
re: Verizon's Copper Migration Will Be Slow Going
-áI think they're looking at 4G more as a rural wireless option than cities where it isn't too costly to run fiber.
jalawler
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jalawler,
User Rank: Light Beer
1/24/2013 | 7:02:11 PM
re: Verizon's Copper Migration Will Be Slow Going
There are still areas where Verizon has committed to a municipality to build, and hasn't finished. NYC, DC and Philadelphia are the big ones, plus there are odds and ends around the country.
MMQoS
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MMQoS,
User Rank: Light Beer
1/24/2013 | 1:33:59 AM
re: Verizon's Copper Migration Will Be Slow Going
Seven:
You write: "Given the shift in power to the wireless guys, I suspect it is more out
now than it was in 2003 when that was stated. -áThey probably will do
replacements with fiber where they have to, but only in places where
they must rebuild."

I thought that this was the case as well, especially after Mark Wegleitner left.-á But that seems not to be the case at least in New York City.-á Last month while visiting my daughter in Brooklyn, I saw the Verizon trucks laying fiber down under 5th Ave in Park Slope on a Saturday.-á I went up to the workers and they assured me that they were beginning the deployment of FiOS in the area.-á Yes this is New York but this neighborhood was NOT hit by flooding and while the power was out in the area for a short time due to Sandy, there was no major outage of copper services (DSL or phone service).-á
This is a high density area in Brooklyn and while there was no work performed to connect to buildings while I was there, one would expect that next as fiber is then run up the cross streets from the splitters.-á This could provide Vz with many new customers to make their goal.-á In addition, GPON is a good network architecture to also provide b/w for LTE and I expect that Vz has realized GPON (and XGPON?) as opposed to the earlier BPON, has plenty of b/w to support VzW and they can amortize the cost of fiber deployment over both FiOS and VzW 4G.-á
Here in my home neighborhood where I have at&t, at&t is having to pull a lot of fiber to support their new 4G mini (DAS) antennas systems and this has to be expensive.-á Unfortunately I can't get them to FTTH my house :-(
MMQoS -á -á-á -á
Dan Jones
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Dan Jones,
User Rank: Light Beer
1/22/2013 | 7:12:57 PM
re: Verizon's Copper Migration Will Be Slow Going
-áHi, they've stated that certain states have dropped COLR requirements already.
brookseven
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brookseven,
User Rank: Light Sabre
1/22/2013 | 6:18:49 PM
re: Verizon's Copper Migration Will Be Slow Going
Duh,

I think that they have come to realize that if they want phone only customers on Wireless and that they are reserving their investments for that. -áTheir choices are:

1 - Put in more DSL (and then lose to cable)
2 - Focus on building wireless
3 - Putting in more FiOS which costs a lot

They stated long ago that 3 was out. -áGiven the shift in power to the wireless guys, I suspect it is more out now than it was in 2003 when that was stated. -áThey probably will do replacements with fiber where they have to, but only in places where they must rebuild.

So, I think they will continue to sell non-FiOS properties where they can although I suspect the buyers have dried up (especially if USF rules change). -áThey consider the TDM copper network a depreciated asset, so writing it down does not matter. -áThey are already trying to talk the FCC into wireless as a COLR capable service. -áThis means they will continue to shed copper customers, which in one way is a HUGE benefit to them in labor costs. -áThe complete elimination of the copper network eliminates all kinds of union jobs.

seven
Duh!
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Duh!,
User Rank: Light Sabre
1/22/2013 | 5:14:35 PM
re: Verizon's Copper Migration Will Be Slow Going
On the one hand, they want to move customers off of the copper network.-á That makes a lot of sense.-á It's probably worth more as scrap than as a depreciated asset, OPEX has to be huge, and margins must be shrinking.-á Versus their FiOS base, which has one of the highest ARPUs in the industry, low OPEX, and is more resilient.

On the other hand, they aren't doing any more build-outs (except maybe in storm-damaged areas). -á As much as they'd like to think it is, 4G LTE is not really an equivalent service: data caps, lower speeds, lower availability, customer perception.-á So does this mean that VZ wants to hand over a good chunk of their customer base to the MSOs?-á What do they do with fixed assets like poles, pole attachments, pedestals and COs in areas that they don't plan to serve with FiOS?-á How are they going to unload their COLR obligations with a story like that?-á Or do they think they can pawn off more of their rural assets on unsuspecting buyers?

I truly don't understand the strategy.
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