Verizon may have shifted a lot of its attention toward wireless services in recent years, but the telco isn’t going to hang up on its wireline network anytime soon.
As the service provider’s wireless business densifies its network and prepares for upcoming 5G rollouts, the role of fiber has become a key underlying asset to support wireless backhaul of these higher speed services.
Matt Ellis, EVP and CFO at Verizon, told investors during the MoffettNathanson 4th Annual Media & Communications Summit that Verizon sees the wireline assets overall as an important element of its network future.
“We’re committed to the wireline business because it’s really the backbone of all of the network services that we’re offering,” Ellis said.
In Boston, the service provider laid out a plan to build a fiber network that will accommodate not only Fios broadband for consumers, but also support its 4G and 5G wireless deployments as well as business services.
The service provider plans to implement a similar strategy in other cities.
“We talked about how we’re building the network in Boston and you should think about that as a blueprint for how we build fiber in other locations,” Ellis said.
Ellis said that the fiber assets are key to running all of its networks, particularly wireless, because these networks will require more small cell site connections.
“The reach of fiber into the wireless network, or wires in general, is a lot more than it used to be as you move from a macro cell site network to one with more small cells in it,” Ellis said. “What’s important to our product and services, whether that’s wireline or wireless is the quality of the underlying fiber asset in that architecture.”
Enhancing fiber networks
By selling off its wireline properties in California, Texas and Florida to Frontier Communications, Verizon was able to turn around and purchase XO Communications.
The XO purchase gave Verizon fiber presence in 45 metro areas it can use not only to serve wireless needs, but potentially to ramp up its Ethernet reach to business customers.
“What we did with the three geographies we divested to Frontier, which had a lot of copper in them, and took the proceeds and used that to buy the XO assets,” Ellis said.
But buying assets is only one part of its fiber network expansion strategy.
Under the terms of a $1.1 billion, 3-year fiber and hardware purchase agreement with Corning, Verizon will enhance capacity to support a next-generation fiber platform that will support all of the company's businesses.
Later, Verizon signed a similar $300 million deal with Prysmian, which will supply the telco with more than 17 million kilometers (10.6 million miles) of ribbon and loose tube cables.