Verizon Flaunts Fiber Plan

KELLER, Texas -- Verizon Communications Inc. (NYSE: VZ) launched its nationwide fiber-to-the-premises (FTTP) rollout here in this blooming suburb this morning. In a posh neighborhood park, the carrier helped put a face on the million homes it plans to pass with fiber by the end of this year.

As part of the launch, Verizon laid out some specifics as to the services it plans to offer. But the competitive and strategic reasons for the New York-based RBOC to launch this widely covered service from Tarrant County are hard to ignore.

Keller was picked for several reasons, but mostly to make a statement to cable companies and city governments across the country. For cable companies, the message is that Verizon isn't going to sit idly by and watch its data and voice businesses disappear. "A few years ago long-distance providers were the enemy because they were offering local service in our territory," said a Verizon spokesman after the press conference. "Our bullseye is now fixated on cable companies."

For city governments, Verizon made it clear that if local governments make it easy for the carrier to get permits and construct its network, the carrier can return the favor with improved services and increased investment in the community.

Case and point: Keller, Texas. Only a few years ago, this sleepy whistlestop along I-35 began remaking itself as a pristine, albeit forgettable, suburb, with national chains and $250,000 homes with tiny yards. Sitting north of the Dallas-Fort Worth metro area, one of SBC Communications Inc.'s (NYSE: SBC) largest territories, most parts of Keller are served by Verizon, with some served by SBC, and some by OneSource, a facilities-based CLEC that provides phone, TV, and data services to the city government and schools.

City officials, anxious to attract more businesses to the area, paved the way for Verizon to update its network and, in turn, give Keller a coveted spot in telecom history. Mayor Julie Tandy greeted Verizon warmly as she compared dial-up Internet to a garden hose, DSL to a firehose, and FTTP bandwidth to Niagara Falls.

Oh, and there's the local investment. According to Keller city records, Verizon is in the process of spending about $600,000 to build an 1,800-square-foot office on Keller Parkway.

Since January, Verizon has already put more than 440,000 feet of fiber optic cable in Keller's neighborhoods. By the time construction is finished, some 1.2 million feet of fiber will be in place. The bill for all the fiber, active electronics, and components is around $15 million, according to Verizon Network Services Group VP Paul Lacouture.

So what will Verizon offer with all that fiber? Bob Ingalls, president of Verizon's retail marketing group told Light Reading that it will offer three classes of data service, featuring download speeds of up to 30 Mbit/s. Each class of service will have four phone lines and the ability to turn on video services when they become available. Next year, the network's top speed will reach 100 Mbit/s, he says.

What Verizon didn't talk about is price, though Ingalls says the lower-tier services offered will be "very much in line" with the going price for 1.5 Mbit/s service offered by cable companies and DSL providers.

While Verizon was installing fiber, cable companies were feeling the need to cut prices in order to stay competitive. In nearby Fort Worth, Charter Communications (Nasdaq: CHTR) offers a spotty 3-Mbit/s connection for about $40 a month. A year earlier, Charter charged nearly $75 a month for the same service.

Charter and SBC couldn't be reached for comment.

Verizon executives didn't specify when they would begin offering FTTP service in Keller. They simply repeated that the service would be turned on "sometime this summer." It's also noteworthy that video services aren't planned for Verizon's FTTP-served homes until sometime in 2005.

Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI) officials weren't at the launch, but their gear was on display as Verizon employees gave locals a demonstration of how FTTP networks operate. As Light Reading has previously reported, Verizon's FTTP initiative not only means a good deal of revenue for the gear maker, but may also be the springboard that secures the company's sale (see Verizon's FTTP Demo Helps AFC and AFC Chief Says Sale Makes Sense).

— Phil Harvey, News Editor, Light Reading