Monday, February 27, 2006

Verizon Sees FTTP Connection Costs at $715 in 2006, Down from $1,200

Speaking at an investors' conference in New York, Verizon's Vice Chairman and President Lawrence T. Babbio Jr. said the company has targeted costs of $890 in 2006 to pass a home or business with FTTP. This cost, which includes a blend of aerial and underground deployment, had averaged $1,400 at the start of 2005.

Babbio said that at the beginning of 2005 Verizon's fiber network was passing an average of 100,000 premises per month, and by the end of the year it was passing an average of 235,000 premises per month, as the deployment ramped up to its current and ongoing run rate.

As the network deployment continues to scale up, the same trend applies to costs to connect a premises, Babbio noted. In January 2005 Verizon's connection costs averaged $1,200, and the goal in 2006 is $715.

Some other highlights of the presentation:

  • Verizon expects the new fiber network to dramatically reduce the costs in outside plant maintenance by at least 40% , with opportunities for further cost reductions in the future.

  • Most new FiOS data customers are migrating from dial-up services or are switching from cable offerings.

  • Churn rates for FiOS data customers are below churn rates for other broadband customers.

  • Verizon expects to build out a network capable of delivering new FiOS TV services to a total of from 3 million to 4 million premises by year-end 2006.

  • In its first 60 days, Verizon Business has begun migrating off-network voice and Internet protocol traffic on to Verizon's networks, generating cost synergies.

  • Regarding the previously announced workforce reduction in Verizon Business of 7,000 employees over three years, approximately 3,500 of those reductions will occur in 2006, on a base of 35,000 employees.

See also