Verizon Communications Inc. has chosen four vendors for the fiber-to-the-premises (FTTP) project it will begin building in 2004, designed to offer data at higher speeds than cable modems or digital subscriber line as well as potential video applications.
Speaking at a UBS Warburg Inc. global communications conference, Verizon vice chairman and domestic telecommunications president Lawrence Babbio said the company plans to pass 1 million homes with FTTP technology in 2004.
Facing a competitive threat from cable operators looking to enter the telephone business, regional Bell operating companies Verizon, BellSouth Corp. and SBC Communications Inc. agreed on a set of standards for FTTP architecture earlier this year.
Verizon plans to use FTTP to offer consumers networked such video products as digital video recorders, interactive HDTV, video conferencing, gaming, video-on-demand and distance learning, as well as voice over Internet protocol telephony and remotely managed information-technology services.
The FTTP network could offer 622 Megabits per second to the user and 155 Megabits per second to the network for both homeowners and small- to medium-sized businesses, Babbio said.
Advanced Fibre Communications Inc. will provide the central office and premises electronics for the project, or the "active" elements in the network.
Sumitomo Electric Lightwave, Pirelli Communications Cables and Systems North America and Fiber Optic Network Solutions will provide Verizon with fiber-optic cable and other outside plant.
Per-home construction costs will range from $1,200 to $1,300, said Babbio. Verizon would spend 60% to 70% of that to pass the home, he said, with the rest of expenditure "success-based" capital, depending on what services a customer ordered.
"We think the plan is pretty good," he said. The 2004 build will not require any additional funding for Verizon's $7 billion capital budget, he said.
"FTTP will be replacing some of the other projects," he said. Additionally, Babbio said that ongoing support for FTTP costs about half as much as traditional technology.
Verizon plans to launch FTTP services in two markets in the first half of 2004, and expand that to 100 central offices in nine states, if all goes well. One of the things that has to go well, Babbio said, is the regulatory climate.
"We're still asking the FCC for further clarification of new rules," he said. "It's imperative we not be forced to share this investment with our competitors, as has been the case with the copper platform. Regulation will only deter our investment in this new technology."
"We believe there is significant customer demand for services that can be based on the FTTP platform," he continued. "Our deployment will have widespread benefits, and stimulate the development of new apps and commercial services."
Babbio also touched on other Verizon initiatives, including the bundling of local, long distance, wireless and DSL. "Bundling is driving customer loyalty and revenue per subscriber."
On the another front, Babbio said DSL now passes 74% of Verizon homes and will reach 80% by year's end. "That's a 10 million-line improvement in 2003," he said. "Driving more customers to bundles is critical to growing the revenue."
Verizon also plans to launch VoIP service in the second quarter of 2004, matching cable on that front. "We will have a two-phased rollout plan," Babbio said.
Phase one will launch in the second quarter with a non-quality-of-service offering focused on DSL subscribers and the general consumer market. He said Verizon will either build the application itself or outsource the work. While the features will meet or exceed the competitors' offerings, he said the service is designed to be supplementary line focused.
Phase two will kick in during the fourth quarter of 2004.
"It will be [quality-of-service] built to Verizon standards for the high-end customer and small- to medium-sized enterprise," he said.
Services would include address book, call log, voicemail, visual voicemail, voice-activated dialing, click to dial, calendar services and real-time call management.
"We're excited about this plan," he said.