Verizon "One Fiber" Shows Changed Fiber Economics and Business Model
Verizon’s “One Fiber” strategy for the city of Boston shows the changed role of the fixed network as well as a shift of the business model. The original vision for FiOS was consumer services, lower operating costs and support for broadband (mainly entertainment video, at the time).
The new vision builds on a number of revenue streams and operating considerations, anchored by enterprise services and support for the mobile network.
There probably also is a bigger potential role for fixed wireless backhaul, should use of fixed wireless develop further.
“I think of 5G initially as, in effect, wireless fiber, which is wireless technology that can provide an enhanced broadband experience that could only previously be delivered with physical fiber to the customer,” said Lowell McAdam, Verizon CEO.
That new use of fixed wireless will be designed to support gigabit speeds. “As we densify the network for 4G, it sets us up perfectly for deploying 5G with the millimeter wave technology,” said McAdam.
Compared to using fiber-to-the-home, fixed wireless should cut network costs in half, McAdam says. By using fixed wireless, Verizon also avoids the cost of drop cable connections, the second-biggest driver of the access network capital cost.
“We expect there to be a significant cost reduction” for fixed wireless access, compared to fiber, McAdam said.
Essentially, Verizon believes it can create a denser fiber network that initially supports enterprise customers and also supports backhaul for a dense network of small cells across the city.
But doing so also lays the foundation for consumer fiber-to-home services and support for Internet of Things applications as well.
"When we looked at running the fiber for wireless, we said, well that will enhance what we can do from an enterprise perspective and by the way, it's only $300 million more over the next six years to actually deploy fiber to the home from that same fiber," said Fran Shammo, Verizon CFO.
The larger point is that the business model for fiber facilities in metro areas has changed. Essentially, in dense areas such as Boston, what Verizon must spend to support business users, the mobile backhaul network and new small cell deployments, the incremental cost of targeted consumer fiber-to-home deployments is reduced dramatically.
And where consumer FTTH does not make sense, Verizon can use fixed wireless to supply gigabit access connections.