Summary
1. For over three years, we have been striving to convince many industry observers of the true intentions behind Verizon’s FiOS. 2. It is not a theory based on conjecture. 3. Yet, despite such a reasonable explanation, many individuals believe to this day that the RBOC being off of its rocker is more plausible as a justification for such a high level of investment.
Analysis
Despite massive culture change at Verizon, it is still rooted in a firm foundation started during the Ma Bell days that CAPEX has to make sense. If it cannot be stipulated that that with all of the talented as well as experienced executives and board members, that after all of this time, that rational decision making is tending to happen at the RBOC – then there cannot be a logical discussion. A good number of top managers at AT&T get what Verizon is doing. It is really not that hard to delve beneath the surface to figure out that FiOS is giving the service provider an unprecedented opportunity to provide fiber to large business accounts. It is as simple as follow the money.
Such a plan was in place at the RBOC about 20 years ago. If the telco were ever given favorable conditions to provide broadband services, the goal would be to target large office buildings in major metropolitan areas along the east coast. When the FCC decided not to make the large telcos unbundle infrastructure, if they provided broadband to homes, it was a simple matter of going past those residences that tended to be near business parks, etc. There is no other sensible reason for Verizon making this huge investment.
Therefore, the primary purpose of FiOS has been a smokescreen to secure as many Fortune 2000 accounts as possible. The big FiOS marketing machine is still mesmerizing too many analysts. If the service provider were totally upfront about its real goals, the FCC would have been pressured to rescind the order concerning unbundling. For anti-capitalist motives, there is a lot of elitists, who feel entitled to determine what kind of profit margins are excessive for large businesses in the US.
Is Verizon’s $23 billion bet with FiOS paying off? Yes, as long as one fully understands the real nature of the gamble.
