Verizon's Big Risk

The New York Times asks all the right questions about Verizon's fiber-to-the-home service, FiOS. For example: "But why spend so much money on new wires when cellphones are becoming ubiquitous and profitable?"

The answer is more obvious when you ask a more blunt question: "Why upgrade your completely out of gas, 40-plus-year-old copper telephone infrastructure NOW when cellphones will be able to do the same thing as fiber-to-the-home in just five more years?"

All they risk by waiting to deploy FTTH is the specter of becoming the landline version of Sprint Corp. (NYSE: S). And look at the Hail Mary Sprint has to throw just to make itself seem viable in the face of a pitiful track record of bad bets, technology mistakes, and positively horrifying customer service.

Back to The NYT article… AT&T's CTO John Donovan is quoted in the story and the comparison the article makes to Verizon makes Ma Bell look like Ma Chicken. Donovan is quoted as saying: "The last thing we want to do is overdeploy fixed capacity into the ground where there is not recover for being wrong by putting in too much."

Really? There's a carrier CTO out there who is afraid of having too big a pipe between the proles and his network?

Stop acting so scared of Wall Street. You're more like a railroad than you are Google.

AT&T needs to stop defending the fiber-to-the-curb choice and start repositioning it as an interim step. They can and should dismiss FTTC as a legacy of former CEO Ed Whitacre's out-of-it, old-guy routine and move forward with a more realistic strategy that, like Verizon, sees FTTH as a bet that will still be relevant even after wireless networks are capable of 4G speeds and services.

Fortunately, AT&T only competes with Verizon in a couple of Texas suburbs, as opposed to the nationwide war it is waging against the cable companies. And AT&T's U-verse is a great service, but even a cursory look at the extra equipment needs, the battery problems, the city aesthetic/political battles, and it becomes clear that FTTC isn't as much of a money saver or a time saver.

If FTTH is destined to happen anyway, AT&T has made a huge mistake.

— Phil Harvey, Editor, Light Reading
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