imrms

Analyzing Verizon's FiOS Bet

Hey, 'dios' the 23 billion dollars is not for the engineers and technicians they have today. Design and construction of all that fiber cable is being done by outside contractors. It's all additional cost. After service to the customer has been established, it maintained by Verizon union technicians.

Analyzing Verizon's FiOS Bet

I worked on the project for the then Bell Atlantic (pre GTE merger to Verizon) when it was called Fiber to the Home (FTTH) in 1987. That same year the FCC opened up the Cross-Ownership rules for re-examination. These rules prevented Telephone companies from owning cable TV franchises. As one of only twelve employees and members of the Cross-Ownership Docket Team, I presented the only position paper that urged Bell Atlantic to pursue a challenge to the present prohibition. It was subsequently overturned by legal department on the grounds of a first amendent violation.

From that point on Bell Atlantic should have rigorously pursued the cable business by acquiring or building their own systems. However, after an unsuccessful merger attempt with the then cable giant TCI (CEO John Malone) and an tepid aquisition of a system (Jones Cable) in Virginia, the process stopped. Had the company not lost sight of the future or "truth (Verity) on the Horizon" (Verity + Horizon = Verizon - truth on the horizon - that's how they came up with the silly name) they would have spent far less capital over the last twenty years while still building a fiber network where it was far less costly to do so in new construction areas. The result would have been much the same, but at far less cost. The executive decision to pursue the venue came much too late. That's why they are doing what they did. However, dividing the revenue of an existing market with that kind of capital investment will take many more years to be fruitful if it ever does.