Verizon Selects Vendors for Fiber to the Premises Project; Deployment and New Product Rollout Begin in 2004
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NEW YORK - Verizon announced today it has selected four vendors to provide the fiber-optic and electronic equipment for the company's planned deployment of high-speed, high-capacity Fiber to the Premises (FTTP) systems, which is slated to begin next year and will lead to an array of new telecom products for consumers and businesses.
In a speech at a UBS global communications conference here today, Verizon Vice Chairman and Domestic Telecom President Lawrence T. Babbio Jr. said the vendor selection completes the second major phase of the project, begun earlier this year when Verizon, BellSouth and SBC adopted technical standards and issued a joint request for proposals to equipment suppliers.
"We are one step closer to beginning deployment of a new technology that will revolutionize this industry, enabling a new broadband economy through the delivery of a vast array of high-speed, high-capacity data services, along with voice and video products, to consumers and business customers," Babbio said. "Our investment in this new technology will create new revenue streams through the development and sale of new products that can only be provided over this type of technology.
"Our customers are telling us they want faster speeds and more data-transfer capacity; this technology is capable of transferring data at speeds up to 622 megabits per second to the user and 155 megabits per second to the network - far faster than cable modems or today's DSL," Babbio said. "We believe our deployment of this technology will have widespread benefits throughout the economy of our nation by stimulating products that can only be delivered over this platform."
Verizon has selected Advanced Fibre Communications Inc. to provide the central office and premises optical electronics for the project, also known as the "active" elements of FTTP technology. In addition, Verizon has selected Sumitomo Electric Lightwave, Pirelli Communications Cables and Systems North America, and Fiber Optic Network Solutions (FONS) to provide the fiber-optic cabling and other outside plant equipment for the project. This equipment is also known as the "passive" element of the project. Verizon is continuing contract negotiations with several other passive element vendors.
Babbio said Verizon will invest in FTTP next year without an increase in its historical capital spending levels. Verizon's capital investment plans will begin to shift from deploying copper to building a network based on FTTP technology to better serve customers and improve the company's already strong competitive position. Verizon's initial deployment plans involve passing about 1 million homes with the new technology in 2004, with the deployment pace potentially doubling in 2005.
FTTP is an advanced fiber-optic technology that can be used instead of copper wires to connect a home or business directly to Verizon's network, allowing the company to provide new high-speed, high-capacity data products, in addition to voice communications and video applications. Fiber-optic systems use hair-thin strands of glass fiber and laser-generated pulses of light to transmit voice, data and video signals at speeds and capacities far exceeding today's copper cable systems.
With over 9 million miles of fiber-optic systems already in place in Verizon's network - including all of the links between Verizon's central-office switching systems -- the installation of FTTP will represent a natural extension of this fiber technology over the so-called "last mile" to residences and businesses.
In addition, Verizon expects to realize some ongoing expense savings through reduced maintenance costs once the technology is deployed.
Verizon will install the new technology in two ways: directly connecting existing homes and businesses to the company's network as they order services that use the new technology, and installing fiber-optic lines to many new residential developments and business premises as they are being built.
"As we continue to move ahead, it is important to stress that the Federal Communications Commission (FCC) must further clarify the rules it recently released," Babbio said. "It is imperative, for example, that we receive assurances that we will not be forced to share our investment in this new technology with our competitors, as is the case with copper facilities today. This sort of regulation will only serve to deter our investment in these new technologies."
Verizon will continue performing lab and technology interoperability tests on the FTTP systems during the fourth quarter of this year, ensuring the new technology works properly with existing and new Verizon operations support systems. In the first half of 2004, Verizon expects to begin initial test deployments in at least two communities. By the end of the year, the company expects to deploy the new technology in over 100 central offices across nine states.
A Fortune 10 company, Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services, with approximately $67 billion in revenues and 221,000 employees. Verizon companies are the largest providers of wireline and wireless communications in the United States, with more than 139 million access line equivalents and 36 million Verizon Wireless customers. Verizon is the third largest long-distance carrier for U.S. consumers, with nearly 16 million long-distance lines. The company is also the largest directory publisher in the world, as measured by directory titles and circulation. Verizon's international presence includes wireline and wireless communications operations and investments, primarily in the Americas and Europe. For more information, visit www.verizon.com.
NOTE: This press release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the duration and extent of the current economic downturn; materially adverse changes in economic and industry conditions and labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; material changes in available technology; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; the final results of federal and state regulatory proceedings concerning our provision of retail and wholesale services and judicial review of those results; the effects of competition in our markets; our ability to satisfy regulatory merger conditions; the ability of Verizon Wireless to continue to obtain sufficient spectrum resources; our ability to recover insurance proceeds relating to equipment losses and other adverse financial impacts resulting from the terrorist attacks on Sept. 11, 2001; and changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings.