Verizon has quietly scaled back its aggressive fiber deployment in favor of DSL over tired old twisty pair. The take rate for the company’s premium priced FiOS service has slowed. While I have not been able to find a break down by service, I’m certain the slowest products are pay TV and voice.
We have been repeatedly told that bigger pipes and direct fiber connections are impossible in America because of far flung population. Never mind the fact that the cost if installing a fiber or twisted pair loop to a residence are nearly identical. John Timmer of ARS Technica provides a current update contrasting fiber service in Hong Kong vs New York City. Both are extremely dense population centers. Both are outrageously expensive. Both have archaic laws regulating new construction and public utilities with plenty of red tape to slow the process. I’ll even bet the New York city fathers will insist that Hong Kong’s infrastructure is more primitive and its government more corrupt. So why is it that the average Hong Kong resident has a 100MBPS direct fiber connection available at a price lower than Verizon’s cheapest DSL offering? And how can it be that a great many New Yorkers can’t even get FiOS at any price?
Hong Kong Broadband Network announced the initial results of its “Awesome Speed. For Everyone.” sales, which offer a symmetric 100Mbps fiber connection for the hefty price of US$13 a month. In the two months it has been offering it, customer growth has tripled compared to the earlier months of 2009. Clearly, the company has found it relatively easy to roll out or purchase fiber in Hong Kong’s dense urban environment, and is attempting to recoup its investment in infrastructure by attracting lots of people to its service using low prices.
To get half that download speed (and one-fifth the upload) with Verizon costs $140 a month, assuming you bundle it with local phone service. It also requires a one-year commitment, and Verizon has recently raised the early termination fees so that anyone quitting ahead of that year will now owe the company $360. These would suggest that the company plans on recouping its costs through fewer customers that pay far more. (ARS Technica)
My belief is that the Verizon suits do not see access as a serious business. The entire FiOS business model is based on selling subscribers a “triple play”. More consumers want access without overpriced VoIP service and pay TV. If you only want access, Verizon’s suits think DSL is all you deserve. If we had real competition over the last mile (equal access to the copper infrastructure), Verizon would have to deploy fiber to have a shot at continuing to charge a premium price.