July 19, 2004 12:13 PM PDT

Verizon's fiber race is on

Verizon Communications has stepped up its battle against cable operators with plans to debut a broadband-over-fiber service later this summer.

The service, called Fios, will be launched in Keller, Texas, and later parts of southern California and Florida, the company said Monday. At up to 30mbps (megabits per second), Fios is a quantum leap compared with Verizon's DSL (digital subscriber line) service, which runs at a maximum of 1.5mbps.

Fios can reach these speeds because it's based on fiber-optic lines that serve Internet access at a much higher clip than the traditional copper wires that support DSL.

Verizon also unveiled plans to sell cable television over the speedy Fios connection in 2005, boosting its strategy of offering customers a triple pack of services--voice calls, video and broadband--sold at discounted prices if purchased in a bundle. Cable operators have been using their own "triple play" strategy for several years to woo customers away from Verizon and the three other regional Bell operating companies

The launch of Fios opens a new front in a war between the Bells and the cable industry. Both sides are trying to lure the millions of Americans who are upgrading from slow dial-up services to speedier broadband connections. Cable leads in overall broadband market share, but the Bells have kept pace largely through aggressive DSL discounts and promotions.

Some of the Bells, such as Verizon and SBC Communications, see fiber as an answer to their problems. The Federal Communications Commission plans to allow the Bells to invest in fiber without requiring them to share their infrastructure with third parties, as is the case with copper wire networks. For many years, the Bells have protested that the line-sharing rules on copper wire networks are unfair, because cable companies are not required to share their lines.

Of the four Bells, Verizon is considered the furthest along with its fiber plans. It reiterated on Monday its goal of reaching 1 million homes and offices by the end of the year, with a third coming from expansion in Huntington Beach, Calif.; Tampa, Fla., and the Dallas-Fort Worth areas.

"Fiber from Verizon is coming down their streets and heading straight for their doors, and the excitement in these communities is building," Paul Lacouture, president of Verizon's network services group, said in a statement.

Fios will be only slightly more expensive than Verizon's DSL plans, even though it will be much faster, and Verizon will supply the modems needed to make the switch to fiber, a company representative said.

A 2mbps to 5mbps Fios connection will cost $35 a month if purchased along with Verizon's local and long-distance telephone service. The service will cost $40 if purchased alone. A connection of up to 15mbps is available for $45 a month if purchased as part of the same telephone service bundle, or $50 alone. The company did not reveal pricing for the 30mbps plans.

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