New York City needs to support Verizon's fiber switchover
A flurry of comment recently erupted over at DSL Reports on the news that landlords in six New York City buildings are actively preventing Verizon (NYSE: VZ) from replacing the copper plant in their buildings with fiber.
I'm not from New York, but I've watched a lot of Seinfeld, which qualifies me for… absolutely nothing. But the article immediately put me in mind of a typical Seinfeld episode. I can imagine Kramer leading a building-wide protest against "The Man" and his nefarious scheme to replace old, damaged systems with a modern, better-maintained, faster service.
The icing on this cake is the statement from Verizon, in a complaint (.pdf) to the New York State Public Service Commission filed Jan. 2, that some landlords are asking for "excessive compensation from Verizon to permit the installation of fiber optic facilities."
While the decision to go ahead and replace Verizon's copper plant with fiber was spurred by the massive damage caused to its copper lines by Hurricane Sandy, there are some legitimate qualms about the company's move.
"It ain't about kickbacks," a commenter on the DSL Reports article wrote regarding the landlords' refusal. "Management has the right to manage the building, which includes inside-wiring, and the right to prohibit disruptive installation of new facilities, no matter how coveted."
Some voice users, it was noted--particularly the elderly--didn't want to see their copper-based service yanked, for fear that they would not have voice service following a storm like Sandy. Fiber service relies on ONTs that use utility power and have just an eight-hour battery backup.
And of course, there's the fear that Verizon will use the cost of the switchover to fiber to justify more price increases for its services (certainly not an unreasonable worry).
The thing is, Verizon's buildout was bound to happen eventually, storm or no storm, despite its stoppage of new FiOS deployments elsewhere. Fiber is pretty much where its network is headed, for a number of reasons--lower maintenance costs, much higher speeds and the capability to do a heck of a lot more with an IP-based infrastructure.
But, many say, copper is everywhere, it's reliable and it works even when the power is out in your home. Well--that's not always the case. It certainly wasn't the case for NYC's Verizon customers, as its COs (central offices) were flooded and its infrastructure was chewed up by the salt water. Even in areas not as badly affected by the storm, customers using cordless phones that rely on utility power to operate couldn't access voice service when their power went out.
Sure, copper plant is reliable, but then, so are draft horses. That's why you see horse and wagon teams all over the city, right?
Still, as much of a booster of fiber-based broadband as I am, there are problems that need to be sorted out. The cost involved in buildout will be passed along to subscribers, meaning there's a possibility that voice rates could rise higher than many people on fixed incomes can afford to pay. And even though Verizon says it's committed to 100 percent replacement of its copper plant, that's a lofty goal that could take longer and cost more than even the telco wants to admit.
One analyst firm argues that cost isn't the biggest factor in impediments to deployment. "To date, we believe the slow pace of fiber conversions (~200k in 2012) has been limited by several factors including federal/state regulations, unfavorable union work rules, and other capex priorities," a Jeffries company update on Verizon stated.
In fact, the telco stands to make back its investment pretty quickly, the firm went on. "Using unheroic assumptions, pay back is impressive. We estimate 2015 Adjusted EPS could be as high as ~$4.05, or nearly $1 higher than consensus estimates due primarily to this under-appreciated opportunity."
So, get with it, New York City. Other municipalities, or at the very least their residents and businesses, are howling for fiber deployments, something they may not see in the next few years unless local regulations and fiber providers' business models change. Verizon is using Sandy's destruction as an opportunity, taking a step forward to improve its infrastructure. NYC needs to support this move.--Sam