Verizon's FTTP Texas Feeler

News Analysis Light Reading 7/19/2004

FORT WORTH, Texas -- Verizon Communications Inc. (NYSE: VZ) announced today that all of its fiber-to-the-premises (FTTP) talk will soon become a reality for the residents of nearby Keller, Texas.

The carrier still didn't say specifically when the service will be turned on but did provide a few more data points -- including some pricing -- that it wasn't ready to give back in May, when it held a press conference that promised the moon (see Verizon Flaunts Fiber Plan).

The upshot is that Verizon is still committed to the plan, but the carrier is having to lay out lots of cash to catch up to its competitors in some regions.

The carrier revealed today that its FTTP customers will have a choice of three data speeds: For $34.95, customers can expect 5 Mbit/s downstream and 2 Mbit/s upstream and a local and long-distance calling package. For $44.95, customers can expect 15 Mbit/s downstream and 2 Mbit/s upstream and a local and long-distance calling package. Pricing for 30-Mbit/s connections will be announced later.

But Verizon's effort in Keller is still one away from a triple-play [ed. note: ain't that just the story of my life], the company acknowledging it won't provide video or TV services until sometime in 2005.

In Texas, Verizon says its FTTP network will pass about 100,000 homes. The population of Keller, where Verizon has so far spent $15 million on its FTTP network, is estimated to be only about 33,100 strong by the North Central Texas Council of Governments.

In effect, Keller -- a city that's also served by SBC Communications Inc. (NYSE: SBC) and OneSource Communications -- has become an expensive testing ground for Verizon.

For, even if a full one third of the residents in Keller subscribe to Verizon's FTTP network, the carrier's network will have cost it about $1,360 per customer served. Supposing one third of Keller's population does subscribe to FTTP services at the $45 monthly rate, Verizon would take about two-and-a-half years to make its money back.

One carrier is already delivering triple-play services to parts of Keller and nearby Southlake, Texas. OneSource, a CLEC and cable operator that counts Keller City Hall as one of its clients, offers customers basic phone service, 77 cable channels, and an Internet connection up to 2 Mbit/s for $84.95 a month.

That competitive pressure is, in part, what is driving Verizon towards its goal of passing 1 million homes by the year's end. It's noteworthy, too, that the carrier is still extending its copper network in areas where FTTP isn't feasible (see Verizon Wrangles Remote DSLAMs).

Verizon says it will pass 100,000 homes around Huntington Beach, Calif., and another 100,000 homes around Tampa and parts of Hillsborough County, Fla.

— Phil Harvey, News Editor, Light Reading

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