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brookseven 4/26/2014 | 11:29:53 AM
Re: Unfortunate KBode,

 

If I can rephrase for you...

The challenge for Service Providers is not "IF" investments get a Return on Investment, it is "WHEN" they will get a ROI.  This is the fundamental differece that people have to look at.  They simply have things that are MORE profitable to invest in.  Should I build more FiOS or do I make more money building out Wireless or MPLS or a CDN or or or....

A second thing that I can do to help...

At AFC, we did an analysis of the business case for FTTH.  The reason was we needed to understand the drivers of carriers around their choices in building their access network.  When we did the analysis the NUMBER 1 issue was Line Loss.  Yes - Line Loss.

Verizon is located primarily in low growth to negative growth population states.  That means that new residential lines are hard to come by.  Compare that to AT&T in Texas, Florida and California and think about the different behaviors.  This is not true for every property but think about it on the overall footprint (Northern VA would be a counterexample in Verizon).

Verizon was getting crushed by Cablevision in NYC.  Go back to 2002 and look at the numbers.  It looked likely that they were going to lose the vast majority of the core urban/surburban residential lines.

Now they do FiOS and poof the situation changes and the line loss begins to stabalize.

The case for expansion suddenly changes to the number 2 issue becoming the most important....construction costs.  In particular, the construction of the fiber plant.  This means that the ROI on expansion is actually different than the ROI for the original footprint.  

I note (and have done so in other places) that Google is not building its Fiber in FiOS properties.  That was the other 1/2 of our analysis...the first to build Fiber essentially locks out the others.  The incremental cost to put in higher speed PON is realtively small compared to the initial construction.  Right now, lets call GPON electronics at about $150 per customer....double that with a dispatch to replace ONTs.  So a bulk replacement of BPON with GPON inside of Verizon is a couple of billion dollars.  Compare that to the original cost and you will see that this is tiny.  Even that cost can't be justified at the moment and the majority of FiOS is still BPON.

I expect superficial analysis from posters here.  I think the folks who write for LR and HR need to do a MUCH deeper job in thinking this whole thing through.  

I want to give you guys one more ancedote study of market analysis.  I worked with a Marketing guy who did a study of home starts versus Access Spending in the RBOCs and found a direct (though delayed) coorelation.  This kind of stuff is knowable and thinking that the people that work in this stuff don't understand how they should manage business cases is arrogance to the highest degree.

KBode - I appreciate your thoughtfulness and patience on replying to folks.  Wish I was.

seven
KBode 4/26/2014 | 9:17:48 AM
Re: Unfortunate "If Fios expansion was profitable - if subscribers were wanting to buy it, Verizon would certainly provision it."

Nonsense. Their focus right now is on wireless.

FiOS is profitable. Again, it's just not profitable quickly enough for modern, impatient investors, and it's not AS profitable as LTE. Verizon and AT&T have received tens of billions in subsidies and tax cuts over the years for fixed-line upgrades either half of not provided (look at what's happening right now in New Jersey, and the history of Pennsylvania). Combined with full profits including wireless, build-outs could have been expanded dramatically.

Returns would have come from those investments, they just would have taken time.

"You can bring plenty of people who can discuss Fiber "can be profitable", but their claims are worthless, since they aren't willing to put up their own capital to back them." 

So everybody who claims fiber investment can be profitable (like Google, countless smaller operators, and municipalities) is wrong and you are right...just because. Care to state your employer?
SachinEE 4/26/2014 | 6:21:36 AM
Re: Verizon FiOS Slows Down Again It is high time that Verizon executives stop ignoring the negative transition in the company's business success a few years ago. Protecting the company`s reputation by quoting the little successes in areas like the growing penetration rates for the FiOS Video and the FiOS Internet, which as at the moment rate at 35% and 39.7% respectively, and also on the healthy growth in FiOS revenues which shot up by 15.5% from the previous year's 3 billion dollar mark. Verizon should try to climb up to its previous glory by taking advantage of their new FiOS quantum which has a higher surfing broadband with download speeds of up to 50Mbit/s to 500Mbit/s.
unbearable 4/25/2014 | 11:55:25 PM
Re: Unfortunate If Fios expansion was profitable - if subscribers were wanting to buy it, Verizon would certainly provision it.   But most of us don't - $70/month and up is just too much, especially when the cable company comes in for half the price.

Buffalo, Baltimore, et al, all presented the same anti-business climate to Verizon, who had plenty on its plate elsewhere, so they moved on.

Google certainly took note, and that's why their fiber program puts requirements on city government, not the other way around.  Or perhaps you can explain to us what happened in Overland Park...

You can bring plenty of people who can discuss Fiber "can be profitable", but their claims are worthless, since they aren't willing to put up their own capital to back them.

 
pcharles09 4/25/2014 | 8:25:14 PM
Re: Unfortunate "... which is what Google's offering symmetrical 1 Gbps for"

Where?
steve q 4/25/2014 | 7:40:39 PM
fios I see the main issue with fios is that it forgot how to take the lead in better servive to the customer. We seam to follow the same route as comcast and direct tv in more on thr stb and not in the data end of Verizon and the old Nynex that saw data as the best for everyone.
KBode 4/25/2014 | 2:16:08 PM
Re: Unfortunate Their pricing certainly isn't as cutting edge as the product. I've had it since 2008 without a single hiccup, ever. But it's not cheap, and they have shied away from more serious price competition vs. FiOS. Many 15 Mbps customers pay up to $70, which is what Google's offering symmetrical 1 Gbps for.
KBode 4/25/2014 | 1:54:49 PM
Re: Unfortunate Yes, I've run a business. I've also written about the industry for going on fifteen years now.

Is that what also happened in Buffalo, Binghamton, Baltimore, Alexandria, etc., etc., etc.? There was a shift in executive leadership that more strongly believed in wireless.

I can find you plenty of people to discuss in great detail how fiber can be profitable. It's just not profiteble quickly enough for investors. FiOS isn't profitable? Really?

 "Overage fees generate only one thing: unhappy customers, who spread the word."

Is that why AT&T and Verizon's LTE services have such low churn rates and continue to grow at an explosive rate? And on fixed-line networks, what does it matter if they spread the word if they don't have many competitive alternatives?
mendyk 4/25/2014 | 1:52:34 PM
Re: Unfortunate Being in an area with FiOS is not necessarily a great thing. We switched from DSL only because the copper plant is deteriorating and Verizon isn't going to do anything about it. Basic FiOS data service is no better and in fact may be slightly worse than DSL. But, hey, we're state of the art now.
b5a1s16 4/25/2014 | 1:46:53 PM
Re: Unfortunate I'm a Verizon manager in one of our FIOS Service Centers and we're definitely 24/7.
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