Cable and satellite providers are sweating the inevitable invasion of fiber-optic television and broadband from Verizon’s FiOS network.  With penetration rates as high as 40% in markets they’ve targeted, and the inclusion of mega-markets like New York City, they have every reason to keep a close eye on Verizon’s every move. 

FiOS offers a different breed of video, voice, and broadband services through its 100% fiber-optic network, which means higher-quality video and HD programming, and much higher broadband speeds than cable can offer today.  According to the Broadcast Newsroom, this has the big cable and satellite companies scurrying to compete with their now antiquated coaxial-based networks. 

Verizon has already pushed FiOS into 16 states with new markets appearing almost every week it seems, and customers are beginning to notice the differences and advantages over the cable they’ve had for years.  "FiOS is the only product that could beat cable companies on all three services, said one MSO vice president of technology planning, who asked to remain anonymous. “The FiOS architecture is really, really scalable,” the executive said.

Nowhere are the advantages more apparent than with the extreme bandwidth FiOS allows its customers.  While most cable companies are still pushing 3-8 Mbps down and 1 Mbps up, FiOS offers up to 50 Mbps down, and 5 Mbps up.  Overall, FiOS is capable of delivering 2.5 gigabits-per-second downstream to a single home, which is more than 250 times what cable modems typically pump out today.  While the excessive bandwidth might not be needed today, it lies dormant waiting for the future of high-bandwidth situations, and will be ready and able when needed while the competition will be scrambling to keep up.

Verizon has made a serious investment with this initiative, and is betting on what’s to come.  Its plan is to dump an estimated $23 billion into the cause, and to extend its network to 18 million homes by 2010.  This represents a cost of about $4,000 per connected home on behalf of Verizon.  Will it be a success?  Without a doubt; the article from Broadcast Newsroom stated; "FiOS TV counted 1.2 million subscribers as of the end of March, putting it on pace to hit more than 3.4 million TV customers by the end of 2010 even if it just holds steady at its current average penetration rate of 19%. The company expects FiOS to become cash-flow positive by the end of 2008."  With that large of an investment, and to be showing profit after only two years is quite impressive in my book. 

I don’t see FiOS as being as big a threat to satellite companies as it will to cable companies.  Die-hard satellite fans seem to always stick together, and with satellite being the obvious leader in current and future HD programming, they’ll always have a distinct following over cable and even FiOS.  Not to mention the fact satellite is the only option for rural-based consumers who have no other choice.  Satellite also isn’t limited to markets and regions that require a large infrastructure to operate, which will always keep them a little bit safer than their cable counterparts.  I do know one thing, when FiOS opens up shop in my city, I’ll be the first in line to sign-up! 

Related:

Entry was posted on Monday, July 21st, 2008 at 6:14 pm under Internet.

Read more entries by Justin Montgomery.
Stumble It!