Verizon’s FiOS Buildout Could Top Original Estimates

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Verizon Communications chief operating officer Denny Strigl hinted at an industry conference Tuesday that the telco’s multi-billion dollar buildout of its nationwide FiOS fiber optic network could exceed the 18 million homes the company initially expected to pass by the end of 2010.

Strigl said that Verizon is on track to meet its stated goals of passing 12 million homes with FiOS by the end of this year and expects to add 3 million additional homes in each of the next two years. But success in providing the service to multiple dwelling units (MDUs) could tick that number up even higher.

“We think we can take our target up,” Strigl said at the Deutsche Bank Media & Telecommunications conference in New York. “We’re looking at that right now, in terms of the overall economics of doing that.”

When Verizon first announced FiOS in 2005, it planned to spend $18 billion on building the network over three years. Verizon is currently in the throes of the franchise approval process in Manhattan and is working with the cities of Philadelphia, Pittsburgh and Washington, D.C. to offer service there—all areas with heavy MDU concentrations.

Strigl said that increasing FiOS reach won’t necessarily cost more and that could be because of MDUs.

“There may be some upside for us in numbers of homes passed without significantly changing the capital requirements, particularly as we pass MDUs,” Strigl said. “300 in one building is a lot easier to serve than 300 individual single units. The economics of doing that, particularly on the capital side of the business, are not all that much different.”

But Strigl stressed that Verizon was not saying it would definitely increase the FiOS reach. It was only a possibility.

“We have no specific announcement to make today,” Strigl said. “You will hear more from us in the future.”

As the FiOS footprint could grow, Strigl added that the telco will also push its digital subscriber line service, which he admitted has played second fiddle to the fiber-optic product.

“Our focus has been very heavily on FiOS and to a lesser extent on DSL,” Strigl said. “Going forward you will see more balanced emphasis on both DSL and FiOS. We have advertised FiOS at the expense of DSL. I’m not sure that that was the right thing to have done. Going forward I know that we should be emphasizing DSL more.”

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