Verizon Readies Move on Manhattan

The company plans to bring its fiber optic network into the city.
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Verizon

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Operations Chief Denny Strigl says the company now has a plan for fiber expansion into Manhattan.

To date, the New York phone giant has strung its fiber optic network called FiOS through vast sections of its largely suburban territory, but the expansion effort had stopped at the city limits.

Now, however, with recent changes in fiber technology among other developments, cities are a big revenue opportunity, with "very good upside," said Strigl, speaking to investors Wednesday at the UBS Global Media and Communications conference in New York.

Apartment buildings have been a challenge to Verizon's FiOS effort largely for two reasons. Until recently, fiber cable didn't bend enough to snake successfully through high-rise buildings. But with

Corning's

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new bendable fiber, the technology no longer faces rigid limits.

Another hurdle is landlords. Building owners typically select one cable company to provide exclusive service to tenants. Verizon will have to negotiate on a building-by-building basis as it maps out its fiber plan.

For more than two years, city dwellers could only rely on cable modem or DSL connection for their broadband access. Verizon will soon test whether there is pent-up demand for its super-fast lines and big TV offering.

Some observers say the development is significant but probably not as large as fans imagine.

"I'm not convinced this will be all that dramatic," says Telecom Pragmatics analyst Sam Greenholtz. In a city like New York, with so many older buildings, rewiring the infrastructure will be a daunting task, says Greenholtz.

"They will probably start by going to new buildings under construction," says Greenholtz. "There are too many problems in the older buildings."

The news comes just a day after cable giant

Comcast

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provided a

disappointing outlook for the year as competition from satellite rivals

EchoStar

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and

DirecTV

(DTV)

as well as bundle offerings from

AT&T

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and Verizon cut into the growth of new service sales.

Strigl also shed some light on Verizon's new embrace of open standards for wireless devices. From Verizon's perspective, new devices, once approved, will be allowed on to the Verizon Wireless -- co-owned by Verizon and

Vodafone

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-- network and billed on a usage basis. This metered service, as you might expect, also represents a big revenue opportunity for the company, says Strigl.

Verizon shares rose 52 cents to $44.32 and Corning was up 56 cents to $24.96 in mid-afternoon trading.