Verizon has set a high bar in fiber builds that will leverage its own builds as well as purchasing other assets like a portion of WideOpenWest’s Chicago network, but the ultimate proof case will depend on what it needs for a particular market.
Matt Ellis, CFO of Verizon, told investors during the Bank of America Merrill Lynch Media, Communications & Entertainment Conference that the service provider will consider whether to lease, buy or build, dictated by the business case it’s trying to prove out.
“As we add fiber—and I think we’ve been pretty consistent in this—we can buy existing fiber, we can build fiber, or we can lease existing fiber,” Ellis said. “I think it is going to be geography by geography will determine what the best and cost-effective approach will be to add the capacity and generate the returns off of.”
Having recently purchased a piece of WOW Business’ Chicago fiber network and, earlier, XO Communications, Verizon could potentially purchase other fiber assets.
These deals come at a time when a number of other players are making deals with regional providers, including Crown Castle, which purchased Wilcon and then Lightower.
However, Ellis did not reveal any potential fiber acquisition targets.
“We take a look at close at what’s already out there and we’re very familiar with all the options out there,” Ellis said. “Most of them don’t bring the asset mix we would like, but there are tradeoffs that allow you to upscale what’s there.”
WOW deal aligned well
In August, Verizon announced it will purchase a large part of WideOpenWest’s Chicago fiber network for $225 million. This move is centered on bolstering the service provider’s wireless backhaul capabilities for current 4G and upcoming 5G wireless deployments.
By acquiring the WOW assets, Verizon will immediately shore up its wireless backhaul capabilities in Chicago.
Verizon will secure fiber to more than 500 macrocell wireless sites and more than 500 small cell wireless sites.
“We have taken a look at different options and WOW was a good asset that has a lot of the fiber we’re looking for,” Ellis said.
While he would not reveal the amount of fiber strands WOW will bring to the table, Ellis reiterated that its plans with Corning and Prysmian call for high counts for new installations.
“In terms of the core, we’re talking about building 1,700 strand count fiber cables with Corning, for example,” Ellis said. “So you’re talking about significant strands in some parts of those networks.”
Multiple use cases
Whether it leases or buys or builds fiber in a particular region, the endgame for Verizon is its One Fiber network vision, which it says can accommodate multiple use cases—residential, business, smart city applications and wireless backhaul.
“What we looked at and said is if you’re going to have that fiber asset there, you should make sure it’s an asset that can serve multiple uses,” Ellis said. “It’s really an extension of what we started in Boston that could serve multiple needs—consumer, enterprise buildings, smart city or small business.”
The first city where Verizon began such a buildout was in Boston. Through a partnership with the city, Verizon agreed to build out fiber to residential customers in key parts of the city while leveraging the assets for other uses.
Starting last year, Verizon began replacing copper with fiber in Dorchester, West Roxbury and the Dudley Square neighborhood. Later deployments will take place in Hyde Park, Mattapan, and other areas of Roxbury and Jamaica Plain.