Study: FTTB is key for Verizon

March 16, 2006 Chantilly, VA -- A joint report from BIA Financial Network (BIAfn) and Telecom Pragmatics concludes that, contrary to the telecom industry's "conventional wisdom," Verizon's access strategy isn't based on delivering fiber to residential customers but is instead centered on deploying high-speed bandwidth to as many large enterprise customers as possible.

March 16, 2006 Chantilly, VA -- A joint report from BIA Financial Network (BIAfn) and Telecom Pragmatics concludes that, contrary to the telecom industry's "conventional wisdom," Verizon's access strategy isn't based on delivering fiber to residential customers but is instead centered on deploying high-speed bandwidth to as many large enterprise customers as possible.

"Just as in the old Ma Bell days when the higher margins from long- distance revenues subsidized the high costs of local service, Verizon appears to be counting on high profitability from FTTB to make up for expected shortfalls with FTTH installations," maintains Sam Greenholtz, the report's lead author and co-founder of Telecom Pragmatics. "The vast majority of the RBOC's installations of fiber within its footprint are along the Interstate-95 highway corridor. Most of the large businesses in its territory tend to be located within 20 miles of either side of I-95."

The report is based on in-depth interviews with service providers, including Verizon, SBC/AT&T, Bellsouth and others. In addition to Greenholtz, who spent 28 years at Verizon and its predecessor companies, contributors include John Spencer, who worked for BellSouth for nearly 30 years, industry analyst Mark Lutkowitz from Telecom Pragmatics, and BIAfn financial analyst David Gross.

"Industry observers need to realize that while there will continue to be substantial deployment of FTTH, especially in communities located near large businesses, Verizon's primary concern is in becoming the leading managed service provider to the enterprise space in the nation," contends BIAfn's Gross. "Providing services to residential subscribers is truly a secondary concern."

The report, "Verizon's Charging Forward with FTTP: Will Credit Markets and Regulators Get in Its Way?" is available for purchase. For more information, go to: http://www.bia.com/TelecomReports.htm.

BIA Financial Network is a financial and strategic advisory firm serving the media and communications industries. Telecom Pragmatics is an independent research and consulting firm for the telecom industry.

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