Verizon (NYSE: VZ) is motivated to update all of the copper wiring that was damaged by Hurricane Sandy to FiOS, but that's not enough to convince landlords in six New York City apartment buildings to let them install fiber.
These landlords claim that some tenants and residents that reside in these buildings want to keep their copper-based DSL and PSTN services.
The telco wrote in a filing with the New York Public Service Commission that a number of building owners, particularly in lower Manhattan, aren't letting Verizon install fiber cable in their buildings, which is preventing Verizon from "restoring telephone service to the tenants of those buildings."
"In many cases, the building owners' refusals have prevented Verizon from installing fiber optic facilities to some or all of the other buildings on the same city block," the telco wrote in its filing. "There are existing Verizon telecommunications customers in the affected buildings that are currently out of service due to Hurricane Sandy and the refusal of these building owners to permit Verizon to replace its damaged copper facilities with fiber optic facilities has prevented Verizon from restoring their telephone service."
Gaining access to the buildings to install fiber isn't the only problem. Some landlords are asking for what Verizon says is "excessive compensation from Verizon to permit the installation of fiber optic facilities."
Verizon could still access these six buildings if they were going to simply repair damaged copper to restore traditional POTS and DSL. Citing responses from its end-user forum, a story in Broadband DSL Reports points out that Verizon is using Sandy as an as an excuse to force people onto FiOS.
One user said that Verizon is replacing his grandmother's copper-based lines with fiber without any cost to her. Since copper-based POTS service is line powered at the CO, she could still make calls even though she did not have power for almost two weeks. And while Optical Network Terminal (ONT) devices have become more efficient in terms of size and service capabilities, they still require power and have only an eight-hour battery backup.
It's likely that the protest against FiOS installation is coming from elderly persons who don't have a computer or an Internet connection and just want their traditional landline phone service to work again.
"I have been working on new FiOS deployment since the storm, and with the exception of 1 day I was on copper repair tickets," one Verizon employee told Broadband DSL Reports. "I have spoken with many customers that are currently refusing FiOS -- most of them prefer the reliability of POTS."
This same employee added that other residents are happy to take the higher speed service.
Two of the advantages that Verizon will gain in switching customers from copper to FiOS are lower maintenance costs and the opportunity to upsell customers multiple services, including voice, video and data.
In December, Jefferies, a global securities and investment banking group, wrote in a competitive analysis report that the New York City fiber replacement initiative may be part of a broader copper-to-fiber conversion effort.
Based on the comments made by Lowell McAdam, Verizon's CEO and chairman, at the UBS Financial conference in December, Jefferies wrote that "we believe 2013 could be the year when Verizon begins the copper shutdown in real earnest. According to our analysis the cost savings could be significant, and will likely lead to multi-year earnings lift."
The other implication of the ongoing fiber conversion process will also be seen on the regulatory front. Jefferies added that "we expect the reliability of FiOS demonstrated during Sandy to be a major selling point for regulatory relief of legacy TDM rules."
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