"People tend to forget that video itself is evolving to where it's going to need more bandwidth," said Sanjay Udani, principal member of the technical staff of Verizon Network & Technology. "3DTV requires a heckuva lot more bandwidth than regular high def. Then you have ultra high def TV which has been demoed which, even compressed with MPEG-4, will be on the order of 100, 200 megabits per channel. I'm not saying it's going to happen overnight but three, four, five, 10 years from now ... when you need multiple hundreds of megabits to carry one channel, what are the options?"
When those services arise, however, the bottleneck won't be in the network, it will be in the home not in the outside plant.
"Both of our networks are coax at the end," said the cable executive. "We have fiber in our networks; we pushed it as far as the market demands. Verizon has made the decision to push it all the way to the side of the house. But at the end, it's still coax going around inside the house that cable and Verizon are using."
Which brings the question back to economics. With more bandwidth-and everyone basically concedes that fiber has room for more bandwidth than coax-Verizon can deliver more video, higher data speeds and more advanced services now.
"Our official Yankee Group perspective is that FiOS is not necessarily a cable killer but it does give them a timing advantage," said Vittore. "I have yet to find an application that you can do in FiOS that cable can't do, but the word can't is key. There's nothing they can't do but there are a lot of applications that are going to take them a helluva lot of time to make up or create and actually deploy."
Cable is not threatened, said Bob Lund, director of advanced network technologies at CableLabs.
"Cable is doing the services the other guys want to do; we have the capacity to meet demand. We're the leader," Lund said. "We're taking telephone customers away from the telephone companies faster than they're taking away video customers from the cable companies."
Again it comes down to dollars. Cable claims that voice and data customers are more valuable than video customers.
"Verizon is moving into a (video) business that ... is the lowest margin at the same time Comcast is moving into data and telephone ... the highest margins," said Effros.
But, Vittore said, Verizon's average revenue per user (ARPU) numbers are "pretty astounding. They have one of the highest ARPUs of anybody in the world."
"Because it's the newest (service) that's been built and therefore it has more bandwidth than anybody else,' said Effros. "To think that somehow fiber is a miracle, it's not a miracle, it's another type of cable. The important part of this is that the newest system on the block, which is FiOS, has more bandwidth available to it than the next newest one."
No matter who has it, bandwidth to the home, right now, is the differentiator, and Verizon FiOS has bandwidth to spare.
"Cable has smart people working on their side ... but we have a head start in that we're already working on stuff that's getting deployed," said Udani. We have the flexibility of adding a service, finding out and changing as we need to."
And putting cable in the rearview mirror, at least for now.