June 21, 2007 12:04 PM PDT

Verizon's fiber-optic payoff

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"We doubt too many of the 1.3 million customers who have said goodbye to the phone company and chosen Optimum Voice (Cablevision's telephony service) would put much credence in transparent phone-company talking points delivered as part of a publicity stunt," he said.

Vince Vittore, a senior analyst with the Yankee Group, said Verizon is likely to face stiffer completion in places like New York where strong cable operators, such as Cablevision, operate.

"Verizon has been very selective about where it's been deploying service," he said. "In the early days, it went after the low-hanging fruit like Keller, Texas. The challenge now will be rolling out service in places where cable operators have been upgrading their networks."

This fierce competition reinforces how important it is for Verizon to offer a near-flawless TV experience. Verizon's executives knew that getting that experience right would be key, and that getting it right meant making sure there was enough bandwidth on the network to deliver several streams of high-definition video at once. It also meant ensuring the service was reliable and met customers' expectations.

The result was a fiber infrastructure that gives Verizon almost limitless capacity. Once the fiber is in the ground, all Verizon needs to do to upgrade the capacity is add a different set of electrical components. In fact, the company is already upgrading its network to a technology called GPON, or Gigabit passive optical network, which will quadruple the capacity. Today, Verizon offers a 50-megabit-per-second high-speed Internet service, but with GPON it will be able to offer 100Mbps to the home.

Aiming for reliability
Fiber wasn't the only key technology decision Verizon made. The company also decided to combine elements of the traditional broadcast TV infrastructure with new Internet Protocol television technologies to deliver video. The result was an efficient overlay network for traditional broadcast TV and an IP infrastructure for video on demand and other interactive services.

"We knew that good quality video was going to be a significant differentiator for us," said Mark Wegleitner, Verizon's CTO. "But we also needed to get to market quickly with a product that was reliable and stable. IP certainly gives us flexibility, and we're using it for video on demand. But we didn't have time to wait for the IPTV technology to mature before we deployed."

While Wegleitner admits Verizon will eventually put all of its video over an IP infrastructure, the decision not to deploy on all-IPTV network from the start has helped the company quickly add new features and new customers.

By contrast, AT&T, which opted not to take fiber all the way to the doorstep, is constrained by how much capacity it can deliver and consequently has had to rely solely on new, unproven IP technology to deliver video.

Because IPTV has not been deployed massively yet, it is difficult to know if it will be able to support hundreds of thousands, or even millions, of simultaneous users. As a result, AT&T has been deploying slowly. Since launching the service last year, the company has signed up only about 40,000 subscribers, which includes a mix of Internet and IPTV customers.

AT&T's network is also capacity-constrained, which means it can deliver only one high-definition video stream into a home at once.

Cable's moving target
Verizon's hybrid approach has meant that the carrier has had to develop a lot of technology in-house, although in many ways that has worked to its advantage. Verizon has been able to introduce new services and features much faster than even its cable competitors. For example, Verizon has been offering multiroom DVR through Fios for almost a year. Time Warner Cable is offering that service in only a handful of markets.

Fios subscribers have had media sharing, which allows them to access on their TVs music and photos stored on their PCs, for nearly a year. Verizon has also developed other interactive elements, including Widgets, which allows people to customize weather and traffic information.

The company says more features are coming. Verizon is currently beta testing a new program guide that replaces one initially developed by Microsoft. This new software will eventually allow subscribers to access more content from their PCs including video from YouTube, podcasts, Internet radio and home videos. Eventually, users will be able to share this media with friends and family outside the home.

But while Verizon appears to be in a good competitive position, the company still has a long fight ahead of it. Cable operators have also been hard at work aggressively upgrading their networks to compete against Fios.

In May, Comcast CEO Brian Roberts demonstrated broadband download speeds of up to 100 megabits per second. New technologies such as Docsis 3.0, a high-speed data-transmission standard for cable, will help make this kind of capacity a reality. The transition from analog TV to digital broadcasting, which the government has mandated must be completed by February 17, 2009, will also help boost capacity for cable operators. Today about 60 percent of a cable operator's capacity is used to carry analog channels.

"Cable is going to unleash a tsunami of bandwidth in 2009 when analog is retired," Zachary Investment's Comack said. "Verizon will be able to compete because it has fiber. But the cable guys will crush AT&T, because they just won't be able to match them on bandwidth."

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11 comments

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Cablevision should worry
I live on Long Island, where the Bayer Family does, and I find CableVision's remarks in this article smug and offensive. I'm a current CableVision customer only because there was no competition, we had to take whatever CV gave us. It's been a joke whenever they say they are increasing channels, ie, adding more value. Ummm... I don't need another foreign-language or home shopping channel or golf channel <eye-roll>.

And they are doing HD wrong... if you have technical knowledge one can easily deduce that they are overly compressing many of their HD channels and the picture quality suffers sometimes. Many times I can get a better OTA HD signal of my local stations than what CV is pushing down the coax.

I have no love of Verizon, but as consumers we need competition in order to make the pricing fair and quality of service hold up. CV (and other cable companies) have had a monopoly for far too long... I can't wait for FIOS to come to my neighborhood so I can kiss CV good-bye.
Posted by tonyc666 (15 comments )
Reply Link Flag
Agreed
"'We doubt too many of the 1.3 million customers who have said goodbye to the phone company and chosen Optimum Voice (Cablevision's telephony service) would put much credence in transparent phone-company talking points delivered as part of a publicity stunt,' he said."

So I am one of the folks who went with Comcast's triple package in my area. The daily outages, the abysmal upload rates, and the higher prices mean that I would go with FiOS easily if it were offered in my area. The cable company doesn't have anything up on the phone company when it comes to customer service or reliability.
Posted by samkass (310 comments )
Link Flag
I agree
I'm also a Cablevision customer and have been for 8+ years. When I first got Cable internet, it was WAY faster than the previous connection I had (verizon 786Kbps). At that time, CV was the way to go and optimum online ranked number 1 in the country for it's speed. Lately however, as bandwidth requirements are going up for high volume web sites, dsl prices coming down to almost dial up prices, and competition from other ISPs, I'm thinking of making the switch when it's possible. I heard GREAT things about FiOS and I hope to make the switch when it's available in my area, provided Cablevision doesn't bring down their prices.
Posted by belal12 (23 comments )
Link Flag
Ditto...
...goodbye Comcast.
Posted by J_Satch (571 comments )
Link Flag
FiOS delivers everything they promise
We got FiOS about a week after it was made available in our area, and I couldn't be happier with the service or the support. Installation was punctual, fast and professional, the service has been rock-solid, the few outages we've had have been addressed promptly and with virtually no action on our part, and the price is right.

Basically, it provided everything our former cable broadband service promised but didn't deliver very well.

Current rumors suggest Verizon's TV service will be available to us in the next month or so. We've already decided to sign up for it the minute it arrives, so we can finally ditch the cable company (Time Warner Cable) for good.
Posted by UnnDunn (55 comments )
Reply Link Flag
Cable is Slow to change and Upgrade!
FIOS is the way to go. The pace of change and upgrade to the technologhy with cable is a joke. Cable gives you just a little and charges you alot. When FIOS comes to Washington D.C. , I'm going to switch my ISP. Speed and services are the way to go. Just like Blu-ray over HD DVD, storage size wins out.
Posted by QuietStormX (48 comments )
Reply Link Flag
A phone company with a clue?
Congrats to Verizon. I never thought I'd say this, but for once a phone company got it right. Fiber always has and always will beat coax, twisted pair, or wireless. Hopefully this will be a wakeup call for the operators trying to squeeze blood out of those legacy turnips.
Posted by solrosenberg (124 comments )
Reply Link Flag
I agree.
Contrast Verizon's competitive outlook with AT&T and their vision-
less execs and we see what smart equipment investment is about.
I have had FIOS for over a year now and it has been rock solid.
Posted by 3tire (261 comments )
Link Flag
So Nice!
On the business side for anyone with an office/home office and server(s), they have a 5Mb/5Mb plan for $209/month (static IP, 2yr commitment).

Finally someone offers a decent mid-range plan!

It bridges the gap between Business Class cable, which in my area maxes out at 10Mb/2Mb for about $300/month and TW Telecom fiber which is about $2000/month for 15Mb/15Mb.
Posted by TheRealJizzler (7 comments )
Reply Link Flag
Stuck with at&t
Ya, I'm stuck with att. Live in Central Florida where Brighthouse is the cable provider and att is the phone company. Ever since I heard one of the att exec's say (basically) "we think 6mbps is all the customer needs" I have lost hope. I kind of believe this because if you do research on att U-verse IPTV you will see that they are using all the bandwidth for the TV service and they still need way more because for example if you are recording a HD channel with U-verse TV you can't even watch another freaking channel. :-( This is their choice as a company but I think it sucks for me as a consumer. Wonder if I can get my wife to move<lightbulb>?
Posted by matte989 (6 comments )
Reply Link Flag
Verizon FIOS
I noticed that Comcast was not mentioned in the story and for good reason. FIOS is kick them in the rear if you ask me. I'm so much happier with Verizon FIOS 15mpbs sped over the Verizon DSL we previously had and the cable TV offering has so much more than Comcast cable. I love the variety of offerings FIOS has over Comcast and for the record I'm a Maryland resident.
Posted by lecountb (1 comment )
Reply Link Flag
 

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