Do they want their FiOS TV

Verizon, for the first time gave a clear outline of its FiOS (fiber to the home) plans, telling investors that the company’s big fiber network upgrade is going to cost a total of $18 billion, At present the cost to pass a home is about $933 but the company wants to bring it down to $850 per home and continuously drive down that cost, Associated Press reports.

Light Reading’s Phil Harvey says that it is going to cost about $9000 per home, which seems a bit preposterous to Ron Jeffries. I have a feeling this debate is going to escalate. Instead, time to turn attention to other stuff, which is getting lost in the general optimism around the news.

Verizon said that FiOS TV had about 100,000 subscribers among one million homes where the service is available. That works out to about one in ten FiOS TV ready homes or 10% of the addressable market. By end of 2006, that number is going to increase to 175,000 as service becomes available to 1.8 million households or 10.28% of the total addressable market.

These numbers show that no one is dropping everything and rushing out to buy FiOS TV right now. Verizon’s low-end estimate of 20% market penetration by 2010 (3 million the 15 million homes) seems a tad optimistic, but then who knows what future will bring. The company says profits will come in 2009…. just not soon enough.

Now FiOS Broadband – that is a whole different story. They will have 750,000 customers (though 30% are Verizon DSL switchers) by end of 2006, 15% of their total addressable market. Verizon get $40 a month for FiOS TV service (200 channels etc.) and $40 a month for 10 megabit Internet service. Essentially the same amount of money, thought clearly more people are interested in faster speeds that anything else.

Maybe instead of mucking around with TV, Verizon should be selling more premium tiers, and start making more money right now. And they have headroom when it comes to boosting speeds. Dave Burstein of DSL Prime says BPON allows them to do 100 megabits per second down, and 30 megabits per second up. GPON would allow 250 down, 120 megabits/second up.

“Dynamic bandwidth allocation means the 2.4 gig down, 1.2 gig up is effectively shared, so that 99+% percent of the time any user needing speeds in the hundreds of megabits can access them,” he writes in his special bulletin today.

“It is refreshing to see such a large company aggressively deploying new technology, particularly going against the grain of short-term oriented Wall St. thinking,” writes Andrew Schmitt and he is right. Just now if they could think fresh!


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