Verizon's Fire Island FTTH move shows demand for wireline bandwidth

Sean Buckley, FierceTelecom

Verizon (NYSE: VZ) has reversed its stance on how it will serve the western side of Hurricane Sandy-ravaged Fire Island, N.Y., announcing that it is going to bring Fiber to the Home (FTTH)-based FiOS to the island beginning next summer.

Initially, the telco had been offering Voice Link, a wireless-based voice-only service, to customers affected by the storm. However, the move to replace the copper lines destroyed by the storm with Voice Link incited an outcry from regulators and residents alike.

At that time, Verizon justified its decision by saying there were only about 600 year-round residents on the western side of Fire Island.

John Bonomo, a Verizon spokesman, told FierceTelecom that the Voice Link system was installed as a short-term way for the company to provide voice service without interfering with other companies trying to rebuild in the community.

The disadvantages of Voice Link, however, were obvious: It can't handle fax, modem, alarm systems or broadband data. Some residents also complained that the service was "spotty" during emergencies.

Voice Link also faced criticism from both the New York Public Service Commission (PSC) and Eric Schneiderman, New York Attorney General. The PSC, according to various reports, threatened to fine the telco up to $2,000 per line.

So what drove Verizon's change of heart?

The western side of Fire Island may have the feel of a typical American small town, but the residents' hunger for Internet connectivity remains strong.

"It's portrayed as a Mayberry R.F.D. [from The Andy Griffith Show]," said Tom Maguire, Verizon's head of national operations support, in a Bloomberg article. "But what we discovered is that it's a Mayberry R.F.D. with an insatiable appetite for Internet."

Not surprisingly, the idea of putting in new copper--the only option the company had when it initially brought POTS service to the island community decades ago during the Bell System era--is not appealing to Verizon.

Bonomo said since Fire Island is close to the ocean, the wires could get "saturated with salt water and even the salt air could corrode aerial copper plant."

Once the fiber is installed, customers will have three options for service: a fiber-based voice service, a dual play of data and voice and wireless-based Voice Link for just voice. However, consumers will need to turn to a satellite provider for their video service.

Although Verizon does not say what speeds it will ultimately deliver to residents, it's likely the company could extend some of the similar speed tiers such as 15/5, 50/25 and 75/35 Mbps to start. All of these are tiers the existing copper-based network can't match today.

One question now is whether Verizon's Fire Island FTTH plans will set a new precedent for replacement in other areas affected by Hurricane Sandy. The telco has been replacing copper wire destroyed by the storm in Manhattan. As part of a broader last-mile fiber migration program, it has also set a goal to migrate what it calls "chronic copper customers" to FTTH.

During the second quarter, Verizon said it moved over 86,000 customers from copper to fiber and a total of 169,000 during the first half of the year. It has set a goal to ultimately migrate a total of 300,000 customers over to fiber in areas where it currently offers FiOS.

However, the question now is what the company plans to do about other areas of its footprint such as Mantoloking, N.J., which was also ravaged by Sandy, as well as other areas that have been left out of its FiOS plans.

Some have said Verizon's move off its legacy copper networks to either its growing LTE wireless or Voice Link may make good business sense, but as my colleague Sam Bookman opined in a related column, it's an inconvenience for customers.

It will take time to see how Verizon will handle last-mile network migrations in other areas of its footprint, but its decision to wire Fire Island with fiber shows that residential customers want solid wireline Internet service and are willing to pay for it. --Sean