June 17, 2008 / 11:09 PM / in 10 years

Verizon mulls alternatives to all-fiber FiOS

LAS VEGAS (Reuters) - U.S. telecommunications company Verizon Communications Inc is considering alternatives to employing an all-fiber network for its FiOS high-speed Internet and video service after 2010, its chief technology officer said on Tuesday.

One selling point of FiOS has been its use of fiber to the premise (FTTP), which means the fiber optic network is plugged directly into consumers’ homes to enable stable, high-speed Internet and multiple high-definition video channels.

But with a cost in excess of $20 billion, FiOS is more costly than rival AT&T Inc’s U-verse service, which makes use of existing copper lines. Verizon has said FTTP is the best way to ensure high speeds.

“What we’d look for is another approach to FTTP,” Chief Technology Officer Mark Wegleitner told Reuters on the sidelines of the NXTcomm telecommunications industry conference in Las Vegas, when asked about plans for FiOS beyond 2010.

Verizon aims to build out FiOS, which competes with cable providers’ video and Internet services, to over 18 million homes by the end of 2010.

Wegleitner said he sees room to expand FiOS after 2010 to another 18 million users, but shifting away from FTTP could help expand high-speed Internet and video into sparsely populated areas where it is too expensive to build out an all-fiber network.

“I’m not sure what the trigger point would be. There still could be more gas in the engine for FTTP,” he said.

NETWORK NEUTRALITY

Verizon is the No. 2 U.S. phone company and co-owns Verizon Wireless with Vodafone Group Plc. It is poised to take over AT&T’s spot as the top wireless provider once its planned acquisition of rural wireless provider Alltel goes through.

Wegleitner said that increasing Internet video viewing, as well as growth in advanced mobile phones that allow for Web browsing and video entertainment, will contribute to strong growth in Web traffic in coming years.

Asked about network neutrality, or the issue of whether service providers like Verizon should have the power to choose how to deliver bandwidth-heavy content like video streaming or online file-sharing, he said the company has not yet had to block or control such traffic.

But the problem was unlikely to go away and that Verizon was looking into technology to prevent network congestion, he said.

“There will always be a need for some sort of rational network management,” he said, adding any method would need to be based on a “principle of fairness.”

“My personal view is that applications tend to expand to consume all available resources,” he said. “We’re going to see continued pressure on the network to grow and to meet application requirements.”

Verizon has identified high-speed Internet, along with wireless, as the key growth driver ahead amid a decline in the traditional phone business.

On Tuesday, the company launched a new campaign to bundle Verizon’s high-speed Internet service along with Verizon Wireless subscriptions, targeting consumers who don’t have a landline phone.

Wireless subscribers can also add on FiOS TV service for a “triple-play” bundle, it said. The bundles will consolidate bills and offer a slight discount to separate subscriptions.

Verizon shares fell 0.97 percent to close at $35.89 on the New York Stock Exchange, while AT&T shares fell 1.33 percent to $35.69.

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