Corning Still Expected to See Slow Ramp-up of MDU fiber at Verizon

Implications: 1.      Corning recently announced successful tests at Verizon on its ClearCurve drop cable – although there was no mention of these trials being completed. 2.      There is also a reference of purchases – but actual amounts are hardly evident. 3.      It seems more likely that Verizon will use this type of product in the enterprise space.

Analysis:  While there is no doubt that ClearCurve is going to be a tremendous addition to Corning’s already huge fiber cable offerings, there is still a lot of unanswered questions about Verizon’s ability and commitment to rolling out FiOS to apartment buildings and condominium complexes.  There is also no uncertainty that fiber to the MDUs will occur in some instances.  However, many issues still remain for the MDU’s, especially in the urban areas, where access to individual apartments is going to be restricted -- as well as in those places where the apartment building owner wants to control who and what type of equipment is going to be brought into the facility.  

And what about the cable TV companies?  They will want the same opportunities at the consumers as Verizon is going to be getting.   Just how many wires can you run in some of these super-large structures?
 
  A Verizon executive talking about “mov[ing] into high gear,” is relative when starting from a very small base. In addition late last month, at Corning’s Q4 2007 earnings conference call, the supplier said that just “pilot production” of the product has begun and that it “expect[s] another round of trials in New York City to begin shortly.”  

The more interesting statement by the Verizon SVP is that “ClearCurve…is [only] an initial product in what promises to be a family of specialized bendable fiber products we expect to use across our network going forward (emphasis added)." Really the only other place one would you use bendable fiber is at office buildings.  At the earnings call, Corning stated that it “believe[s] that there is a significant value proposition for a bend resistant fiber in the datacom world.  

Corning can throw around the impressive statistic of there being “more than 25 million apartment buildings in the United States” and the opportunity may have been strengthened with this new fiber -- and an insignificant number of apartment complexes may have been wired.  But the actual wholesale deployment in large, multistory facilities has not taken place and could prove difficult in the weeks and months ahead.