Progress Steady for Verizon's FiOS

Carl Weinschenk

For the telephone industry, the future of converged services is in fiber, not the DSL services featured today. Verizon has been the most aggressive of the companies with its FiOS fiber infrastructure project.


Despite the headlines on this Ars Technica story detailing its first quarter numbers -- which gives equal play to FiOS's healthy subscriber growth and the predictable 11 cents-per-share bite the project is exacting from corporate earnings -- the news is more positive than negative.


Of course, not everyone is satisfied. This 24/7 Wall St. piece suggests that the phone company's gains in television are more than offset by the losses it is incurring against cable's VoIP initiatives. However, the writer's attitude -- which is clearly summed up by the headline, "Verizon's Tiny Fiber Business" -- seems to be mislead in basing its conclusions on a raw comparison of video and VoIP gains and losses. The reality is far more nuanced than that.


Things seem to be going very well for FiOS, especially when the results are considered in the context of an earlier report. In September, 2006, the site reported that Verizon was aiming at signing 175,000 video customers by the end of last year. The Ars Technica report says that the company, after the extra three months of the first quarter, has essentially doubled that projection and is at 348,000 customers. On the data side, the report said that the company set a target of 725,000 FiOS Internet customers by the end of 2006. At the end of the first quarter, FiOS had 864,000 broadband customers.


These comparisons are not apples to apples -- one set consists of projections for year-end 2006 and the other results are inclusive of the first three months of this year. However, they clearly indicate that things are going well. There is other anecdotal evidence that the project is going well and that people like what they are getting.


The Ars Technica story says that FiOS passed 6.7 million homes at the end of the first quarter and expects to meet its goal of 9 million homes passed by the end of the year. That pretty much tracks with the figures laid out in story, which said that the fiber network passed 6 million subscribers by the end of 2006 and planned to add 3 million per year through 2010. The incremental figure of 700,000 for the first three months of the year puts it on schedule to pass 2.8 million new homes this year.


The fact that the later results are tracking with the previous projections is good news, since any change would almost invariably be a slowdown in progress and a less optimistic forecast.

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