In 2004, Verizon Communications embarked on an ambitious and expensive plan to build a Fibre-to-the-Premises network, which was going to deliver ultra-fast Internet service and dozens of high-definition video channels along with old-fashioned telephone service. It was planned to past 19 million homes which represented roughly half its territory across the United States.

When Verizon annouced the $23 billion investment in FiOS, it was met by a chorus of skeptics, both on Wall Street and among rival service providers. Some suggested it was going to be the death of Verizon. However today those same skeptics are praising the results that Verizon has achieved and in turn are critising AT&Ts FTTN strategy and lack of vision.

Verizon now has over 2 million FiOS broadband subscribers, up nearly 100% on last year, and 1.4 million FiOS TV customers (up 200% on last year), which was a new service (and revenue stream) introduced with the fibre rollout. It is proven to be a run away success for Verizon with extremely high customer satisfaction.

The cost to run the fiber through neighborhoods has been steadily falling since the originally projected US$760 per home passed, and it is now believed to be US$385. The company also spends $650 in equipment and labour to hook up each house that orders a service, significantly reduced from the orginal $1800 it was taking four years ago.

The vision shown by Verizon should be something considered by some of our bidders for the Australian NBN. I have said many times, a FTTP rollout in Australian will cost less than $10b to cover 85% of homes. These costs and the success of Verizon just further justifies the arguement.

Information and content in this article was sourced from a New York Times article.


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