Verizon Using Fiber to Win Race Against VoIP and Cable Rivals

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In an interesting New York Times article, Verizon says it must quickly build its fiber network to fend off rivals such as Comcast and Vonage, which offer inexpensive voice alternatives.

 

With cable companies and single-play VoIP providers (Vonage (News - Alert), Packet8, Lingo, etc.) offering cheaper voice, Verizon is in a race to stop customer defections. According to the Times article, Time Warner Cable, Cablevision and others are taking about 1,000 Verizon phone customers per day.

Verizon will spend about $20 billion before the end of the decade to reach 16 million homes from Florida to California. However, it is New York City—with its dense population and greatest potential for revenue—that has caused Verizon to spend about $3 billion to reach the city’s 3.1 million homes and apartments. With fiber, Verzon will be able to offer voice, data, and video services.

According to the Times article, “To sell the television services that it believes will really help it win back customers, Verizon needs to win a franchise from the city similar to what Cablevision and Time Warner Cable now have.”

 

This may be inaccurate, since I thought Congress’s H.R. 5252 removed the requirement to pay local municipalities a franchise fee? H.R. 5252 would allow providers of cable service to apply to the FCC for a national franchise in lieu of negotiating separate franchise agreements with states and localities for providing cable service to a local area.

 

Ironically, the bill also required VoIP providers to connect users to emergency 911 telephone service, as I explained in a recent blog entry. I'll have to look into franchising requirements some more, but I thought a nationwide franchising law was passed by Congress.

Eventually FTTH (fiber to the home) will be commonplace—the race has already begun. My question is where does this leave “one trick” ponies like Vonage which only do voice? The phone/comment lines are open…