Verizon to build out fiber to the home (FTTH)

According to Business Week’s story in this month’s issue, Verizon’s Gutsy Bet, Verizon commits to a massive fiber-optic FTTH roll-out.

Quick analysis…

“Verizon plans to roll out fiber-optic connections to every home and business in its 29-state territory over the next 10 to 15 years, a project that might reasonably be compared with the construction of the Roman aqueducts. It will cost $20 billion to $40 billion, depending on how fast equipment prices fall, and allow the lightning-fast transmission of everything from regular old phone service to high-definition TV. No competitor yet dares follow suit, fearing it could be their financial Waterloo.”

The 10 to 15 year timeline is very suspect to me. First, it is unreasonably long. It suggests to me that this is primarily a PR move, which may serve any of the several objectives, including: 1) pacify regulators, giving them justification for the FCC rulings earlier this year; 2) to forestall further development of municipal fiber projects; 3) to forestall investment in competing wirelsss or other last-mile technologies by competitors.

Verizon is faced with massive debt already ($54 billion). I find it hard to believe investors will want them to dump this kind of money into technology that will erode their DSL and voice revenues. They have a large unionized, highly paid, aging workforce that has yet to be scaled down. The company is not structured to compete as a low margin broadband service provider.

I feel for Verizon (and their shareholders). I appreciate their recognition of the need to deploy new technology quickly to remain competitive. Unfortunately, new technology alone isn’t enough for them.