Verizon’s Vestberg: Fiber expansion decisions are focused on multiple network uses

Verizon fiber
Verizon's CTO says that the company will take a multipronged approach to enhancing its fiber network. (Verizon)

Verizon is clearly not leaving any option off the table to procure fiber assets to support its growing wireline and wireless network business lines.

With a network that serves multiple customer sets, the service provider has set a three-pronged process for fiber: lease, acquire assets or build it themselves.

Hans Vestberg, CTO of Verizon, told investors during the Citi TMT West Conference any decision about fiber is focused on how best use its capital dollars.

RELATED: Verizon’s Ellis: Fiber is a key growth component for our wireline business

Verizon Vestberg
Hans Vestberg

“You’re always looking at how to do it yourself and what are the economics for that,” Vestberg said. “You lease when there’s nothing to buy and building it does not make sense so we constantly have that evaluation.”

At the same time, the service provider looks at how the fiber expansions can be used to meet the needs of its various business lines.

“We have a wholesale business, an enterprise business, small to medium business that also need fiber so we can share that,” Vestberg said. “When we look at a business case, we look at how we will benefit the 5-6 business units we have.” 

Barclays said in a research note that Verizon’s multiuse approach makes sense to get more from its network investments.

“The ability to use fiber on a multiuse basis helps to sway the calculus of the return economics,” Barclays said in a research note.  

While the service provider continues to be a large buyer of dark fiber from third-party suppliers like Zayo, Verizon has been clearly evolving its stance on how it approaches its fiber strategy.

Over the past year, the service provider took three key moves: It acquired XO Communications and part of Wide Open West’s Chicago fiber network, and it signed two deals to procure fiber infrastructure from Corning and Prysmian.

Each of these moves was predicated on different needs and came with its own unique elements.

On the fiber acquisition end, the purchase of XO Communications will provide Verizon with metro networks in 40 major U.S. markets with over 4,000 on-net buildings and 1.2 million fiber miles. With the WOW purchase, Verizon secured fiber to more than 500 macro-cell wireless sites and more than 500 small-cell wireless sites.

From the build-it-themselves approach, Verizon will purchase up to 20 million km (12.4 million miles) of optical fiber each year from 2018 through 2020 from Corning. Meanwhile, Prysmian will supply Verizon with over 17 million kilometers (10.6 million miles) of ribbon and loose tube cables.