Bells' Fiber Plan Looking Frayed

Observers say keeping the plans ill-defined serves the Bells' purpose. There's a subtle line between fueling a fiber frenzy and disguising the bleaker reality of the Bells' fiscal constraints.

Take Verizon, which at the moment carries some $42 billion in debt: Observers say the company isn't in a position to bump up its $12 billion capital budget by very much. The company's fiber plan, to some degree, will be funded by money that normally would have gone to its conventional network rebuilding budget, say analysts.

Meanwhile, SBC and BellSouth are sinking huge sums into a very different growth area: They're putting up $41 billion through their Cingular wireless venture to buy struggling cell-phone rival AT&T Wireless (AWE Quote).

Dollars and Cents

Meanwhile, any fiber rollout that does take place could take any number of shapes, observers say.

"It won't happen overnight, and in the meantime there will be alternatives," Greenholtz says.

SBC, for example, has an impressive-sounding four-year, $5 billion fiber-to-the-node plan that will extend its optical network further out into half the communities within its 13-state region. From those nodes, SBC will use the existing copper lines with beefed-up digital subscriber lines or possibly an Ethernet technology to bump speeds up enough to handle video signals.

Verizon has selected three communities in three states for its FTTP service, and the company promises six more states by year-end. The company plan is to overhaul central offices to make them fiber-ready. These are big neighborhood branch offices or network hubs that serve hundreds of homes and businesses located within a short radius of the facility.

Initially, actual fiber to the home will be largely limited to new housing developments where the telcos substitute fiber for copper.

"It comes down to dollars and cents," says analyst Greenholtz. "They are going to pick areas with the right mixture of businesses and homes."