Verizon's McAdam: New FiOS markets are not in the cards

Lowell McAdam, CEO and chairman of Verizon (NYSE: VZ), put another nail into the FiOS expansion idea, saying at an investor conference on Monday that the carrier will continue to focus on expanding service availability in existing markets.

Lowell McAdam, Verizon


"The point for us is that there might be a couple of things on the fringe going in and digging up yards and deploying fiber in a lot of new markets isn't in the cards," McAdam said during the UBS 41st Annual Global Media & Communications Conference. "More and more things are going mobile and I think there are more opportunities to partner out of market with companies that are there vs. us going in and deploying FiOS."

Unlike its RBOC brother AT&T (NYSE: T), which can leverage its existing local franchise agreements to deploy its hybrid copper/fiber U-verse service, Verizon does not have the same luxury outside of its established FiOS footprint.

"What Randall [Stephenson] has already got is copper to the home and he's changing out the last mile," McAdam said. "It's a little bit of a different situation for us. We'd have to go in and get the local franchise agreements and that always gets complicated."

Although it is not expanding into new markets, the telco is seeing potential to expand its subscriber base in existing markets such as Texas.

In Texas, Verizon has almost reached the 50 percent penetration point for broadband, and its TV product is not far behind. During the third quarter, Verizon added 173,000 FiOS Internet subscribers, ending the quarter with a total of 5.9 million FiOS Internet customers.

What makes the telco confident about Texas is the introduction of its Quantum 300 and 500 Mbps broadband speed tiers.

"I still think there's opportunity there because as you roll out things like Quantum and you give 300 Megs and 500 Megs people see that," McAdam said. "I got an e-mail from a 15-year old in Florida in Daytona Beach that I read on the way in here this morning begging us to deploy FiOS because he said he can't get those kinds of speeds and he had a friend who did have them."

A key part of driving up broadband and content usage will be by enabling consumers to access content both in the home and on their mobile handsets.  

"When you can have the great experience in your house and team that with the best experience on the mobile platforms, that's the next wave of penetration for both, so I don't think that 50 percent penetration is a ceiling for FiOS penetration at all," McAdam said.

For more:
- listen to the webcast

Related articles
Verizon bucks Q3 seasonal trend as FiOS drives wireline revenues to $3.7B
Verizon FiOS additions drove up consumer revenue 4.3% to $3.6 billion
Vonage, Verizon set stage for further VoIP interconnection
Telco, cable triple play revenue to rise to $144B by 2018