Verizon: New fiber rollout isn't cheap

Verizon: New fiber rollout isn't cheap

Summary: Verizon will spend $17.5 billion to $17.

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TOPICS: Verizon
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Verizon will spend $17.5 billion to $17.9 billion on capital expenditures in 2007--most of allocated to a fiber to the premises (FTTP) rollout--and take an 11 cents a share hit in the first quarter as it continues to bet big on leapfrogging rivals in broadband.

While the company reported solid fourth quarter results and added 2.3 million Verizon Wireless customers, analysts are watching Verizon's big bet on its FiOS service, which rides on FTTP. For the uninitiated, Verizon is going through neighborhoods and laying down fat fiber optic pipes that will pump broadband access into your home. Verizon is also hoping you'll buy TV service on that same pipe.

If Verizon's bet pays off, it'll recoup the billions it is spending to lay new fiber optic lines. These lines are designed to feature broadband speeds as high as 50Mbps to the home. If customers flock to FiOS, Verizon will have a moat around its business to fend off Comcast and AT&T. If the bet doesn't pay off Verizon will have a lot of explaining to do.

It's early, but it appears Verizon's FiOS is getting some traction. At least Verizon's cable rivals realize they won't have a monopoly much longer. Verizon's FTTP network passes 6 million homes as of the end of 2006, more than double its 2005 tally. FiOS TV was also available to 2.4 million homes at the end of the fourth quarter, double the number in the third quarter. The company had 687,000 FiOS broadband connections in the fourth quarter.

Verizon said the peak of its FiOS expenses will come in the first quarter and then decline gradually. Success from here out will depend on FiOS adoption.

Topic: Verizon

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8 comments
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  • FIOS is great

    I've had it for over a year and a half and I love it. While I only get the cheapest service which is 6mb down which is the same as cable. I get 2mb up speed and that is very nice and allows me to connect to my home pc and not worry about slowness. TV is not available yet in my area, but should be soon. Though I probably won't change too it since not all of the sports packages are available on it that I current subscribe too.
    jfp
  • Bungled roll out ....

    FIOS is available on the street adjacent to our neighborhood, but not in our neighborhood. Despite Verizon sending us weekly mailings saying it IS available. Incompetence is my guess.

    If Verizon fails, it will be because of bungled opportunites like this.

    Cable needs competition. And if Verizon makes good on the planned roll out we will all benefit. But I just don't see Verizon doing it based on their track record.
    Oknarf
  • Key to success...

    Verizon will need to overcome their spotty customer service record in order to make FIOS a success. Do a search and you'll find plenty of horror stories about DSL issues requiring weeks and weeks to resolve, if ever.

    Hopefully Verizon will make the necessary changes to their customer service and become fully competitive with the cable providers. God knows this market can use all the competition it can get.
    ejhonda
  • Old tech is expensive...

    Ummm, let's see, I can dig up all the streets (again) and lay a fiber, or I could move to WiMAX. Sorry but to be honest I think once WiMAX takes hold and ramps up it's speeds they will regret having wasted so much on backhoe operators.
    No_Ax_to_Grind
    • wireless vs fiber

      I am leery of wireless because it's not as robust as fiber. And for any wireless network there is still digging that is done all over the place since it's all fiber between the transponders. Broadband is all about bandwidth and you can get more of that through a fiber than you can through the allocated frequency spectrum of WiMax.
      Insight Driver
    • Interesting, BUT

      WiMAX technology provides capacity of up to 10 Mbps per channel. ATT website.
      Limitations
      A commonly held misconception is that WiMAX will deliver 70 Mbit/s, over 70 miles (112.6 kilometers). Each of these is true individually, given ideal circumstances, but they are not simultaneously true. In practice this means that in line-of-sight environments you could deliver symmetrical speeds of 10Mbps at 10Km but in urban environments it is more likely that 30% of installations may be non-line-of-sight and therefore users may only receive 10Mbps over 2Km. WiMAX has some similarities to DSL in this respect, where one can either have high bandwidth or long reach, but not both simultaneously. The other feature to consider with WiMAX is that available bandwidth is shared between users in a given radio sector, so if there are many active users in a single sector, each will get reduced bandwidth. However, unlike SDSL where contention is very noticeable at a 5:1 ratio (if you are sharing your connection with a large media firm for example), WiMAX does not have this problem. Typically each cell has a 100Mbps backhaul so there is no contention here. In practice, many users will have a range of 2-, 4-, 6-, 8- or 10Mbps services and the bandwidth can be shared. If the network becomes busy the business model is more like GSM or UMTS than DSL. It is easy to predict capacity requirements as you add customers and additional radio cards can be added on the same sector to increase the capacity.

      That doesn't quite keep up with 50 Mbps promise of Fiber.
      Ole Rellik
  • FIOS is spectacular

    I chose the site for my new home in part based on FIOS availability. The results have been worth it! My promised internet speeds of 15/2 have been closer to 15/5 in practice. The stability has been stellar and the customer service has been light years ahead of what I experience at work from ATT as a business frame relay customer.

    I've been so pleased that I have scheduled FIOS TV installation and am switching from Direct TV.
    dilbert@...
  • New Customer in the Waiting

    I was with C&P Telephone, Bell Atlantic then Verizon ever since internet access was offered....dial up, ISDN, then DSL. But when they screwed up my bill royally one time and took 6 months to get it straightened out, I left for Comcast for two reasons. 1st, they offered VOIP for multi line handset (Verizon does not) and the internet speed was supposed to be 6mbs. Unfortunately, the VOIP has been steady (but comcast doesn't offer the robust features that Verizon offers on its Wing plan) and the internet has been anything but 6mbs. The long short is when they roll the FiOS up to my door step, I'm changing back to Verizon because I have heard nothing but great things about it. My only hope is that by then Verizon will offer multi line handset support on their VOIP offerings.
    mmgibbons@...