It is no secret that Verizon’s Fios service is simply impressive, offering incredible bandwidth and digital services that use that bandwidth to great effect. Digital television services, digital telephone services, and amazingly fast broadband data plans all powered by a 100% backbone to door fiber optic network make Fios an attractive offering, and differentiates them from a market full of XDSL and DOCSIS based competitors. The use of fiber optics has required Verizon to expand their Fios network carefully, and the first phase of that deployment is coming to an end. As with all endings, there are both good and bad aspects to be considered.
The Good News
The good news is that Verizon’s Fios system is reaching a record number of consumers, and as the company will be able to ramp up their marketing efforts as the deployment draws to an end. More customers will mean that Verizon will be able to receive a return on their investment, which in turn should help the company justify further upgrades. Some of Verizon’s plans for next-generation fiber optic systems are already being tested, and the results are nothing short of impressive.
Speed increases are nothing new to Verizon Fios customers, but the nature of fiber optic cabling lends itself to such network upgrades. Future upgrades to Verizon’s extensive fiber optic network could be used to increase competitive offerings in terms of performance, service more customers, or a combination of the two. Metal wiring seems to be entering the last part of its useful lifecycle from a broadband delivery point of view, and upgrading XDSL or DOCSIS systems to compete with networks comprised entirely of fiber optics is not a winning proposition, but the competition might be good for consumers in the short-term.
The Bad News
The bad news is that if customers do not have Fios access by the middle of 2010, there is no telling just when they will receive it. Verizon has many issues to contemplate before deploying additional segments of its fiber optic network to new markets. The result might be a delay as Verizon assesses the effectiveness of their marketing, and the ability to generate a return on their revenue based on their existing deployment. In short, there is no official time table for when the second phase Fios deployments will begin.
An educated guess would be that Verizon would start the groundwork and planning of a second phase within the first few months of their new marketing campaign. It should not take long to gauge the efficacy of a marketing campaign, and that in turn should help Verizon make well-informed financial assessments as to which markets it wants to enter and compete in. If scores of customers respond to Verizon’s advertisements and adopt fiber optics in short order, then the company is likely to begin an immediate and aggressive deployment into a number of markets.
On the other hand, if the economy has tempered the consumer response to ultra-broadband, then Verizon is in a good position to wait. As the physical limitations of copper wiring become more apparent and the economy recovers, Verizon could be left in the enviable position of having a top-notch fiber optic network that is tried and true, while their competitors are left adapting their existing networks.
In short, Verizon can sit idle and benefit, or they can be aggressive and benefit; the consumer response is likely to be the key factor.
Even if Verizon does wait, it is likely that their experience in delivering IPTV, digital telephone service, fiber-based broadband, and even wireless bundles will serve them well. Marketing research paired with technical expertise should put them in a very good position for expansion whenever they deem it necessary. Many pundits have already predicted that 2010 will be known as the year of recovery, and that the IT sector in particular will see great strides. This is partially due to government incentives that the Obama administration is offering to help keep America’s broadband competitive and ready for the future. Whether or not there are pressing time limits on such government assistance programs may also play a role in determining when Verizon will begin its second phase Fios deployment.
Either way, Fios is already a hit with enough consumers that a second phase is virtually guaranteed. The only questions are: when and where. Sadly, the answer is not likely to be 2010/coast-to-coast, but 2010/select areas is certainly a possibility.