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Broadband Access
FTTH 2007 Europe: Verizon Deals Cablecos FTTH Blow
‘Most Customers Defected From Cable’
by Iain Morris
Having seen the cable companies launch a VoIP assault on its core telephony business, Verizon says it is now hitting back with its ambitious FTTH deployment.
Presenting at the FTTH Council’s Speed of Light Conference in Barcelona today, Michael McKeehan, Verizon’s director of internet and technology policy, says the FTTH project is critical to Verizon’s strategy of reinventing itself as a ‘broadband, wireless and video’ company and taking the fight to the cablecos.
Verizon is aiming to spend as much as US$23 bn by 2010 on its fibre rollout, which by then is forecast to pass 18 million households in the US. The network is already being used to deliver new bandwidth-hungry services, says McKeehan, at the heart of which is the FiOS IPTV product.
Available in 200 cities and to 2.4 million homes at the time of writing, FiOS has already garnered around 687,000 subscribers for Verizon. McKeehan says that up to two thirds of those subscribers have ‘defected’ from cable competitors, claiming that Verizon’s FTTH platform offers a number of benefits over rival pay TV services based on cable infrastructure, including better picture quality and more channels supported.
Perhaps most importantly, argues McKeehan, is the HDTV component. “Cable companies can’t do this, so it’s a major advantage for us,” he says.
And with the capacity limits of FTTH, there is room for much more on the service side in the future, he explains. Indeed, it is a part of Verizon’s strategy not to exploit the full capabilities of FTTH but provide incremental improvements that keep it ahead of the cablecos. “The speed we offer is based on competition from the cable sector,” says McKeehan. “If they offer 6Mbps, we go a bit better. We don’t see the need to ramp up the speeds just yet.”
McKeehan made no mention of the revenues from or profitability of the FiOS service, but he said that the costs of rolling out the FTTH network are dropping all the time. Over the course of 2006, Verizon states that the capex per home passed has fallen by 28 percent, from US$2221 to US$1730.
McKeehan recognises that the expense is much higher in cases where Verizon is forced to implement an ‘FTTH overlay’ on existing copper – effectively maintaining two networks – and for that reason says that greenfield deployments are far more favourable from a cost perspective.
In the near future, the operator is expecting to upgrade its BPON architecture to GPON, which will significantly boost the bandwidth it can provide and pave the way for the introduction of a broader service portfolio.
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