Verizon, Other Fiber Builders Cautiously Optimistic About Broadband Recovery

DALLAS, April 27, 2009 – Fiber-optic technology is beginning to hit its stride in the marketplace, with nearly 13 percent of homes in North America now able to access the super high-speed broadband connectivity, aided by a big push by Verizon Communications.

At the opening of the Broadband Properties Conference here, traditional small-scale fiber-builders and Verizon – now the 800-pound gorilla of fiber-optics – were both cautiously optimistic that fiber-based broadband can help drive the U.S. economy out of the recession.

“Year to year growth continues to be strong” even in the current economy, said Michael Render, president of RVA Associates and the author of a annual survey of fiber optic deployment.

In addition to Verizon’s investment, which have transformed the landscape of fiber through the Bell company’s fiber-optic service, FiOS, tier three independent local exchange carriers are also exhibiting strong growth.

Before Verizon bet big on fiber in 2004, rural carriers were investing in fiber, which is generally regarded as the fastest broadband technology available.

With as little as 500 to 2,000 customers in a fiber development, and generally serving rural areas, these small-time providers are particularly poised to benefit from the Obama administration’s $7.2 billion broadband stimulus program.

Verizon Senior Vice President of Technology Mark Wegleitner came here to tout the company’s success in selling FiOS.

Again despite the economy, the carrier strung fiber to about 500,000 premises during the first quarter of 2009, adding 299,000 net new customers. With speed tiers of up to 50 megabits per second (Mbps) download speeds, and 20 Mbps upload speeds, Verizon aims to leapfrog co-axial cable modem service, which generally provides download speeds in the 5 Mpbs to 10 Mbps range.

Verizon’s fiber network now passes 13.2 million households, and it has 2.8 million internet customers, or about 22 percent of homes taking the service.

Render said that non-Bell companies were even more successful in selling fiber to their communities. “The overall take-rate for fiber to the home by non-[Bell] companies has gone from 28 percent to 52 percent.

Wegleitner said that Verizon has remained on track with its nationwide rollout plans, extending its fiber footprint by 3 million homes a year, which it aims to continue until 2010, when 18 million homes will be passed. That is just over half of the 34 million wireline homes that Verizon serves.

In an interview, BroadbandCensus.com asked Wegleitner whether broadband stimulus funds could incent Verizon to extend its network beyond 18 million. The remainder of Verizon’s service territory is generally served by the slower digital subscriber line (DSL) technology.

“Anything is possible, but we have to understand what is going on first,” he said. “Any broadband solution is in play, but I don’t have enough information” about the rules – which are still being drafted – before the company would consider an investment that may impose additional obligations on the carrier.

Fiber is also continuing to enjoy strong growth overseas, too. Asian has 28.0 million fiber to the premises deployments, compared with 6.1 million in North America and 2.0 million in Europe, said Joe Savage, president of the Fiber to the Home Council. The FTTH Council is currently undergoing a Latin American expansion, said Savage.

Also speaking at the conference was Bill Ablondi, director of home systems research for Parks Associates. Ablondi said that four of the top ten amenities that contribute to the sale or rental of a dwelling unit were tied to broadband.

Wired broadband access was the second-highest demanded amenity, below only an in-unit laundry. Four other amenities are also tied to broadband: in-unit Wi-Fi internet access; common-area Wi-Fi access; hone, internet and video bundling; and in-unit security, he said.

Resources

• Michael Render’s presentation at Broadband Properties Conference, April 27, 2009.