[GRLUG] FiOS -- NOT

[Bob Kline]

If you had fantasies about getting
Verizon's FiOS one day,  be prepared
to wait.  You might have a better chance
betting on Google.

   -- Bob


+++++++++++++++++

NEW YORK (AP) - If Verizon Communications Inc. hasn't already started wiring
your city or town with its FiOS fiber-optic TV and broadband
service<http://apnews.excite.com/article/20100326/D9EMFVEO0.html>,
chances are you won't get it.

Where it's available, FiOS usually provides the only
competition<http://apnews.excite.com/article/20100326/D9EMFVEO0.html>
for
cable TV apart from satellite service. Studies have shown that its entry
into an area leads to lower cable prices, though FiOS itself has not been
undercutting cable TV prices substantially.

But Verizon is nearing the end of its program to replace copper phone lines
with optical fibers that provide much higher Internet speeds and TV service.
Its focus is now on completing the
network<http://apnews.excite.com/article/20100326/D9EMFVEO0.html> in
the communities where it's already secured "franchises," the rights to sell
TV service that rivals cable, said spokeswoman Heather Wilner.

That means Verizon will continue to pull fiber to homes in Washington, D.C.,
New York City and Philadelphia - projects that will take years to complete -
but leaves such major cities as Baltimore and downtown Boston without FiOS.

Verizon is still negotiating for franchises in some smaller communities,
mainly in New York, Massachusetts and Pennsylvania, but it is not working on
securing franchises for any major urban areas, Wilner said. For instance,
it's halted negotiations for the Washington suburb of Alexandria, Va.

Verizon never committed to bringing FiOS to its entire local-phone service
area. It has introduced FiOS in 16 states, but the deployment is
concentrated on the East Coast, and Verizon is selling off most of its
service areas in the Midwest and on the West Coast. Its stated goal was to
make FiOS available to 18 million households by the end of 2010, and it's on
track to reach or exceed that.

That will still leave a third of its service area (excluding the territories
it is selling) without fiber. And as Verizon has signaled this month that
it's focusing on communities where it already has franchises, it's now
becoming clear which ones are in and which are out.

The New York-based company hinted in 2008 that it might continue expansion
of FiOS beyond this year, but the recession seems to have crimped that
possibility. The company has pulled back on promotions for new subscribers,
like the 19-inch TVs it gave away under one campaign. That in turn has led
to lower recruitment figures.

CEO Ivan Seidenberg told investors in January that FiOS itself has been
doing well, but Verizon's sales of
services<http://apnews.excite.com/article/20100326/D9EMFVEO0.html> to
large businesses have suffered in the downturn, and it needed to offset that
by not being too "aggressive" in marketing FiOS.

Verizon doesn't appear to have ruled out further FiOS expansion, but doesn't
have any plans, either. The economics apparently are not attractive enough:
TV service carries fairly low margins compared to Verizon's phone
business<http://apnews.excite.com/article/20100326/D9EMFVEO0.html>,
according to analyst Craig Moffett at Sanford Bernstein.

Moffett believes the end of FiOS expansion means that cable companies will
lose fewer subscribers, starting next year.

The recruitment of new FiOS TV subscribers slowed last year. In the fourth
quarter, it added 153,000 subscribers, little more than half of the number
it added in the same period the year before.

At the end of last year, Verizon had 2.86 million FiOS TV subscribers and
3.43 million FiOS Internet subscribers (most households take both).

Verizon has faced skepticism from investors over the project because of the
high costs. Wiring a neighborhood for FiOS costs Verizon about $750 per
home. Actually connecting a home to the network costs another $600. The
total cost from 2004 to 2010 was budgeted at $23 billion. But it's allowed
Verizon to mount an effective resistance to cable companies, which are
siphoning off landline phone customers and can offer higher broadband speeds
than phone companies<http://apnews.excite.com/article/20100326/D9EMFVEO0.html>
without
fiber straight to homes can.

Verizon is the only major U.S. phone
company<http://apnews.excite.com/article/20100326/D9EMFVEO0.html> to
draw fiber all the way to homes and the only one to offer broadband speeds
approaching those available in Japan and South Korea. The halt to further
expansion comes as the Federal Communications Commission has sent Congress
the country's first "national broadband plan," aimed at making Internet
access faster, more affordable and more widely available.

AT&T Inc. and Qwest Communications International Inc. are laying fiber into
neighborhoods, but still use copper
phone<http://apnews.excite.com/article/20100326/D9EMFVEO0.html> lines
to take the signal the last stretch of the way, into homes. That's a less
costly strategy that has drawn less scrutiny from Wall Street, but it also
limits top broadband speeds. Meanwhile, cable companies are upgrading modems
this year to offer higher speeds, a relatively inexpensive move.
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