Verizon Fans Take Heart at High-Fiber Diet

But what the Street sees as a sure bet, some see as a long shot at best.

Seems while Verizon's support for FTTP has been uncharacteristically high-profile, its actual financing of the plan is less solid, say skeptics. One hint that there's far more posturing than equipment ordering going on is that Verizon has named each of the suppliers it intends to use -- while failing to specify contracts, time frames or budget estimates.

In contrast, "The Bells have never been known to make public contract announcements, especially with vendors whose gear hasn't been field trialed," Lowy says. Earlier this month, Lowy issued a report calling FTTP more hype than reality.

Verizon concedes it is being loud about FTTP, but disputes the hype charge. The company says it plans to string fiber to a million customers in nine states next year.

Economics

By Lowy's estimates, though, it would cost the Bells about $2,000 per house to replace their standard copper wire connections with fiber. Assuming about a third of those customers signed on for phone and Internet services, it would take outfits like Verizon as much as eight years to recoup its investments.

"This is a new and very important business to us," says a company representative. The Bells say they want hard and fast rules, not just assurances that they will have exclusive access to the advanced networks they build.

And the fact that Verizon is dangling potentially juicy broadband supply contracts over an order-starved industry helps increase the leverage the Bells have over federal regulators, say industry observers. In June, regulators said that the Bells will not have to share their upgraded networks with competitors. But the final terms of that ruling are still being debated.

Regulators like the Federal Communications Commission must balance the presumed economic benefits of broadband expansion in the mass market with the protections due phone companies that invest in new networks and services.