Fiber-to-the-MDU: Verizon's Manhattan Project

If you live in Verizon Communications Inc. (NYSE: VZ)'s footprint, a TV commercial asks why you'd consider hooking up a fancy new TV to an old-fashioned technology, like cable.

The simple answer: Sometimes cable's all you've got.

Residents of metropolitan New York, Boston, and other major cities in Verizon's footprint are still relying on cable as their only triple-play option. In New York, only Staten Island has widespread access to FiOS, and it's the least populated, most suburban of the five boroughs. And even there, FiOS is not available in most multi-dwelling units (MDUs), such as apartment complexes.

Getting FiOS into MDUs is crucial to Verizon's goal of being the No. 4 video provider in the country. MDUs make up 25 percent of the company's footprint -- a resource that will undoubtedly need to be tapped to achieve this goal. And making this happen is no easy task.

In suburban areas, Verizon can simply run the fiber lines past housing units, and when a customer subscribes to the service, a technician comes in and makes the connection. In these areas, Verizon can control its own destiny. To reach an MDU however, Verizon has been negotiating deals with the landlords of each building, one by one. (See Verizon Brings FiOS to Wall Street.)

Eric Cevis, vice president of Verizon Enhanced Communities, is largely responsible for negotiating these deals. "A lot of the deals that I am negotiating are seven-year deals. For example, we're negotiating now for one of the Trump properties," he says. In these newer developments, Verizon is also employing some aggressive marketing tactics. "We negotiate marketing rights. Once the facility is in, I have the right to be the only company marketing in that building," says Cevis.

In New York –- a mandatory access state -– Cevis cannot negotiate Verizon being the exclusive provider in any building, but he can be the only one advertising in a building. "Let competition prevail. When people see the product, it pretty much sells itself," he says.

In every single-dwelling home in which Verizon installs FiOS, an optical network terminal (ONT) is placed on or in the dwelling unit to connect the home to the network. In small, garden-style apartments and duplexes, Verizon has been successful doing the same thing. But in the Manhattan high rises, this is simply not feasible.

"We realize we can't pull fiber into the living unit every time," says Brian Whitton, executive director of Access Network Design and Integration with Verizon. In those cases, Verizon installs a special MDU ONT in the basement of the building that serves multiple units. The last few feet are usually covered by the building's coax wiring. In instances where this can't be done, Verizon uses VDSL.

How much the network performance is compromised depends on the unit's distance from the ONT and the type of wiring used. "We've done testing in the Empire State Building. With VDSL1, we can deliver 30 Mbit/s and with VDSL2 we can deliver 75 Mbit/s," says Whitton.

That's a good bit faster than what most consumers get today and, depending on Verizon's timing, the company might not feel too big a bandwidth pinch when high-rise dwellers start demanding multiple rooms of HDTV. "The general consensus is that bit rates of 1.5 Mbit/s for SDTV and 4 to 7 Mbit/s for HDTV would be achieved within 18 months to two years," writes Heavy Reading's Simon Stanley in his latest report. (See MPEG-4: DSL's HDTV Dilemma.)

As far as getting the actual fiber to each of the apartment buildings, Verizon doesn't anticipate that it'll be tearing apart Fifth Avenue, due to the massive network of conduits that already exists under the city streets.

Either way, getting FiOS into Manhattan and other densely populated places is going to take a lot of time. "I would give it a one- to three-year period to see the majority of New York covered," says Cevis.

— Raymond McConville, Reporter, Light Reading

trzwuip 12/5/2012 | 3:11:12 PM
re: Fiber-to-the-MDU: Verizon's Manhattan Project I assume that other Advertising can still be delivered Via US Mail or will FedEx, UPS or DHL become the only company delivering snail mail and packages to the buildings too?
Raymond McConville 12/5/2012 | 3:11:11 PM
re: Fiber-to-the-MDU: Verizon's Manhattan Project You're right, they cannot control the snail mail advertising that enters the buildings. Their agreement is limitted to on-site advertising like information packets in the facility's office, etc.
Raymond McConville 12/5/2012 | 3:11:11 PM
re: Fiber-to-the-MDU: Verizon's Manhattan Project That's a good question. I imagine they have some way of preventing the competition from sending the snail mail in the first place. Perhaps something similar to the federal government's "do not call" list for telemarketing, the cable companies have some people on a "do not mail" list. I'll try to get a more exact answer to this as I am just speculating.
aptdweller 12/5/2012 | 3:10:27 PM
re: Fiber-to-the-MDU: Verizon's Manhattan Project Good article. I understand MDU exclusive marketing rights agreements, but I have a question as to whether the cable/telco operator has the right to negotiate an exclusive "right of use" of the MDU home run wiring, in the situation where the owner owns the home run wiring. I am particularly interested how this applies in right-of-access States. Thanks!
Raymond McConville 12/5/2012 | 3:10:25 PM
re: Fiber-to-the-MDU: Verizon's Manhattan Project As far as my understanding goes based on my conversation with Eric Cevis, exclusive provider rights in MDUs cannot be negotiated in the state of New York since it is a mandatory access state. I am not sure how this would work in each state though but at least in New York, the exclusive right of use that you speak of cannot be negotiated.
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