Thoughts on Verizon's Wholesale FiOS Internet Deal

Verizon (VZ) has closed a wholesale deal with DSL Extreme to resell FiOS internet (not TV or voice), which will be marketed as Fiber Extreme. Fiber Extreme will undercut Verizon's price points. The 50/20 Mb/s service will be sold for $100/mo, whereas at Verizon it costs $150/mo (or $140 if bundled with voice). It is available in 17 states.

Some remarks:

• This is a WBA (wholesale broadband access) deal, not unbundling (ODF access, which is not really an option on PON networks anyway), which was killed years ago. Perhaps the new FCC could reverse that. Obviously, Verizon is trying to stop it, as is described here (free registration). Are they making nice with the FCC by doing this deal?
• A wholesale deal makes Fiber Extreme not just subject to any pricing squeeze from Verizon, it makes the company much more dependent on Verizon for provisioning and innovation. Or so goes conventional wisdom. It is remarkable to see here that the deal comes without portal, email, content and security. Fiber Extreme will be bringing its own value-added services, including Google (GOOG) Apps Premier. And so goes unconventional wisdom: innovation is not only created at the active layer, it can be done at the services layer as well.
• Will Verizon learn that wholesaling (and unbundling) will actually help it fight off cable?

Comments

[Lightway:]

I remember getting DSL from DSL Extreme back in 2000, and I was very unimpressed with them. Since then I've gone with Cox and Time Warner cable and have been pretty happy with both services.

Perhaps DSL Extreme has gotten better since then, but I've heard alot of bad stories of FIOS implementation in Southern California, so I can't see how DSL Extreme would do it any better.

The other difficult part of dealing with DSL resellers like DSL Extreme is, when things go bad, you sometimes have to work with BOTH Verizon and DSL Extreme to get an issue resolved. With just Verizon, they can handle the troubleshooting and resolution from end to end, but my experiences with this dual setup was alot of finger-pointing and wasted time trying to figure out who needed to do what.

That's too bad, as that 50mbps download is tempting. Perhaps cable can boost up to the next level, as I'm currently getting 20mbps down.

May 11 05:31 AM