Verizon FiOS's (NYSE: VZ) top speed may only be 300 Mbps, but Fran Shammo, EVP and CFO of Verizon told investors that it can deliver 1 Gbps service similar to what Google Fiber (Nasdaq: GOOG) is touting--when the demand comes.
Shammo (Image source: Verizon)
Speaking at the Nomura Global Media & Telecom Summit, Shammo said he recognizes that Google Fiber is driving other providers to offer higher speeds to remain competitive.
"From my perspective, Google Fiber's model says that they want folks to use broadband because that's how they monetize their search engines," he said. "By doing what they are doing they are forcing everyone to step up their game, provide more throughput to the home, but FiOS already does that."
Shammo added that "we compete vigorously in the FiOS footprint and I highly doubt Google will build anything in the FiOS area."
Delivering Gbps speeds is something that Verizon has experimented with a number of times in recent years.
The telco conducted two trials of asymmetric XG PON systems: one in Southern Massachusetts and the other at a business customer in Taunton, Mass. delivering 10 Gbps speeds. It also conducted a similar 1 Gbps speed service trial to a consumer premise in New York City.
"Google has a lot of spin around delivering 1 Gig to the home, but we did that almost three years ago in New York City to a home," Shammo said. "It's great and we can do it."
While Verizon continues to focus its FiOS efforts on expanding capabilities in existing markets, it sees the multi-dwelling unit (MDU) and small to medium business (SMB) segments as untapped opportunities.
"Small business and MDU is really the gap between what we passed and what we have opened," Shammo said. "Some of these are difficult because of challenges in getting inside the building and building out the building with the landlords."
In the near-term, Verizon will focus on selling to what it has open. To date, Verizon has 18 million homes passed with FiOS and 5 million customers, meaning that there are still a lot of new households and businesses that could subscribe to the FTTP service.
"It really isn't about opening more for sale; it's about penetrating what we have open for sale," Shammo said. "We'll continue to fulfill the obligations we have."
Shammo added there may be an opportunity to invest an additional $100 million in incremental capital to extend FiOS service to more SMBs.
"It's not a lot of capital but it could be a lot of benefit so we're toying with that right now." he said. "I think I owe it to the investors to say I need to return the investment that we already sunk into FiOS, so our concentration right now is to sell what's open and get more penetration with what's open."
- listen to the webcast (reg. req.)
Verizon FiOS additions drove up consumer revenue 4.3% to $3.6 billion
Verizon on track to add 600,000 FiOS subscribers in 2013, Shammo says
CenturyLink's Ewing: FTTT will stabilize revenue in 2014, reduce maintenance costs