July 9th, 2007
FiOS - Verizon's long-term vision to the 10+ gigabit home
As the computer and Internet revolution blooms, the one thing that is lagging behind is broadband connectivity. There’s no question that the future of long-range high-speed telecommunication is Fiber, but different companies are taking different approaches. While AT&T is going to try and install fiber to within a mile of your home for their U-Verse service, Verizon is biting the bullet and going the last mile by installing FTTP (Fiber To The Premise) for their FiOS service at huge installation cost per home.
The expense of laying fiber to the home:
When Verizon first started laying fiber optic cables to the home in 2004; there was a staggering installation cost of $3000 per home. The sky-high costs and long wait on ROI sent chills through Verizon’s investors but fears have eased as Verizon signed up hundreds of thousands of FiOS Broadband and FiOS TV customers and the installation costs were reduced with improved efficiency. Verizon is now getting closer to $700 per home and they hope to get the cost to $650 per home by 2010. Verizon’s pure FTTP FiOS service was extremely risky at first but it’s clearly the long-term strategic winner. It can even be argued as a near-term winner since Verizon is winning over so many new triple-play TV/Voice/Internet customers and the costs of laying the fiber to the home has been slashed significantly.
There’s just no way Verizon is going to spend a thousand dollars wiring up your home so that you can “sample” their FiOS services for a few monthsNo turning back to copper cabling:
The consumer doesn’t need to bear these initial costs but Verizon does expect their users to sign a long-term contract and they even cut your existing copper cabling so that future home owners won’t have an easy time switching back to regular copper phone service and basic DSL connectivity. There’s just no way Verizon is going to spend a thousand dollars wiring up your home so that you can “sample” their FiOS services for a few months and then decide you want to go back to the copper network.
This has raised some concerns with some customers who are complaining that this isn’t obvious from the fine print but Verizon is saying that they warn the customer during the sale, when the cable is cut, and it’s in the paperwork given to the customer. The biggest complaint comes from independent DSL operators who lease the last mile from the local Telco. Current regulations require Telcos to lease their copper network to independent DSL operators but not such regulation exists for the new Fiber network being built by Verizon. Since it’s extremely expensive for Verizon to operate and maintain a fiber and a copper network, they’re arguing that they shouldn’t have to maintain a Copper network because consumers now have a choice to get their phone service from their Cable provider.
It probably doesn’t make sense to require Telcos to operation two networks but we may eventually need to require the leasing of Fiber cabling to independent Internet Service Providers (though it wouldn’t be fair unless we forced Cable companies to do the same with their coax cabling). The Telco got the right-of-way privileges to install their copper and Fiber cabling through public property so there will ultimately need to be some compromise. That doesn’t mean Verizon let’s other operators use their network for free and they will get compensated one way or another, but they become more of a commodity infrastructure provider rather than a complete platform provider offering Voice, Data, and HDTV services if customers go to the independent operators. This would at least give customers some alternatives other than the cable companies.
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George Ou is Technical Director of ZDNet. See his full profile and disclosure of his industry affiliations.
