Fiber to the Home is Dead. The Plan: Shut Off the Wires and Replace it with Wireless Vaporware.

The Promise: The Boston Globe wrote in April, 2016 that Boston is supposed to have FiOS, a fiber to the home service, deployed to 100% of the city within six years.

"FiOS rollout in Boston could take up to 6 years

"Verizon is finally ready to offer its high-speed fiber optic service to Boston -- a victory for city officials who have long sought meaningful competition for high-speed Internet and TV service in a city dominated by Comcast Corp... Mayor Martin J. Walsh announced the Verizon move Tuesday, a $300 million investment that will roll out in select neighborhoods beginning this summer but will take six years to cover the whole city."

Unfortunately, the executives at Verizon have been telling the investment community that their plan for Boston has nothing to do with FiOS, the fiber to the home service. Recent statements by Verizon now detail that Boston is not getting upgraded to FiOS but is a test of vaporware - a proposed wireless service, '5G', that doesn't exist yet and may never work as advertised, for a number of reasons.

Back in 2010, Verizon announced that it was ending the FIOS deployments, and has left the entire East Coast partially completed. Boston had been asking for FiOS for years, but, as we discussed, most of the state of Massachusetts was never done and this included the neighboring Boston areas of Cambridge, Brookline and Salem. (I note that these towns are not even on the list to get upgraded in the future.)

However, besides not deploying FiOS, both Verizon (and AT&T) previously stated that their plans for more rural areas would be to shut off the existing, un-upgraded copper wires and force-march the customers onto wireless.

And Verizon has also recently filed with the FCC to start shutting off various wired business services in the name of the "IP Transition".

(We will address other fiber deployments around the US in another article, but we see this move by Verizon as being a harbinger of things to come.)

So, if Verizon is no longer doing fiber to the home, and is no longer upgrading or maintaining the copper wires - and is now telling anyone who will listen that its plan is to provide a wireless service that has yet to be commercially available, much less working--it's just vaporware...

Where are the investigations? Where are the audits? Who is examining this bait and switch? And worse, are wireline customers really paying for the fiber optic wires to the cell sites that are dedicated to Verizon Wireless?

Verizon was supposed to be doing 100% of Boston--Not three areas only.

As we previously wrote, Verizon laid out a group of areas where it is supposed to start to the roll out of FiOS, fiber to the home service - Roxbury, West Roxbury and Dorchester. While we believe that Verizon will deploy some FiOS in these areas, we expect that either during this first build out or after the areas are mostly completed, the company will instead be using the fiber optic wires - paid for via the wireline construction budgets of the utility, it appears, for the wireless broadband deployments.

At the Oppenheimer 19th Annual Technology Internet Communications Conference, August 9th, 2016, Timothy Horan, an analyst at Oppenheimer & Co., asked Verizon about their Boston deployment:


"So are you deploying fiber differently now in Boston than you've done for FiOS in the past? Does each small cell need like their own fiber home run to that small cell? Are you going to be deploying a lot more fiber than you have historically?"

David Small, Verizon, EVP responded that they were doing a few small 'suburb' areas, and beyond that it will be wireless.

"Yes, we will. And so, as it relates to FiOS, we've announced a few of the suburb areas, for lack of a better word, for cities, sub cities that we are going to be building into. But beyond that, if you think about the use case for small cells and the coordination elements of the radio access network that need to occur between its corresponding home macro and the small cell, that suggests that, as a general rule, you need home runs from that small cell directly back to that coordinating macro-level cell site. And that's exactly what we are doing."

(According to Verizon, the areas covered are 'suburbs'. In fact, Roxbury and Dorchester are neighborhoods of Boston.)

This is clearly a bait and switch. One has only to read through the articles, like the Boston Globe, to realize that 'wireless' substitution was never part of the story told to the public.

Why Stop Doing FiOS Fiber to the Home -To Save Money and Get Rid of the Unions.

According to Verizon, this is not about building infrastructure of the state utility, but is being done because it is cheaper and gets rid of the unions.

Francis Shammo, EVP, Verizon, stated at the Goldman Sachs Communacopia Conference, September 22, 2016:

"But it's going to be a fixed broadband wireless solution.

"And if you think about the cost benefit of that, today, if you think about FiOS and what it costs me to connect a prem to FiOS. I have to lay the fiber down the street, but then I also have to then connect the home, go into the home, make sure the wiring is right, put in install the boxes, install the routers.

"If you think about 5G, you put the fiber down the road, which is what we're doing in Boston. Then all of the labor and the expense of drilling up your driveway connecting the OT to your house and all the labor involved with that, all that goes away, because now I can deliver a beam into your - into a window with a credit card size receptor on it that delivers it to a wireless router, and there's really no labor involved and there's no real hardware other than the router in the credit card. So the cost benefit of this is pretty substantial, at least, we believe it is."

And it is worth noting that Lowell McAdam, CEO, also pointed out in the second quarter investor call that - I paraphrase: 'Well, wireless is so much cheaper (and more profitable), why bother doing fiber to the home? ("ONT" is an "Outside Network Terminal".)

"From a pure cost perspective, again I think it's a little too early to tell, but what I will tell you is about half of our cost to deploy FiOS is in the home today and the next biggest thing outside the home is the drop. And so our take is that with the router roughly costing the same -- and, remember, we wouldn't have to have an ONT as we think about it today.

"So when we deploy 4G and densify the small cell cantennas (to provide) 5G (service) for very little incremental cost. With the router in the house being probably less than an ONT and router combination today and losing the wiring in the house and losing the drop, we expect there to be a significant cost reduction."


5G is Vaporware

Here's the problem. Verizon told the investors that this is going to be 5G-- but it doesn't exist today. It is vaporware.

In fact, the only thing we know for sure about 5G is that something will show up because 5 follows 4. So 4G will have some new marketing plan called "5-Gee, isn't the public so gullible."

I can hear those yelling that, well, it's common wisdom it will show up. How can everyone get it wrong?

Susan Crawford, Harvard law professor and Internet expert explains just some of the problems with 5G.


"5G has The Next Generation of Wireless -- "5G" -- Is All Hype.

5G is just a marketing term. The connectivity we crave -- cheap, fast, ubiquitous -- won't happen without more fiber in the ground."

And the true punchline to 5G is that it requires more fiber in the ground. At this time, consensus seems to be that 5G has a range of up to 500 feet. Yes, 500 feet. That's around the length of one city block, (though it can vary based on the city or country). What company is going to put in fiber optics to roll out 5G in cities that were not upgraded to fiber already, much less in suburban or rural areas?

Shutting Off the All of the Wires

But this trend to start shutting off the copper wires is going on throughout the Verizon service territories, and it includes closing down various services. Verizon has announced that it is 'grandfathering' - meaning no longer offering specific services.

"Verizon has asked the FCC for permission to phase out sales of a number of its legacy TDM-based voice services throughout the Northeast, signaling the telco is accelerating a transition toward IP- and fiber-based network services.

"The carrier is looking to grandfather five services: Voice Grade, WATS Access Line, Bonded Digital Link, Digital Data, and DIGIPATH Digital Service II. The service provider will stop taking orders for these services in the wiring centers on or after Nov. 22, 2016.

"Verizon said in an FCC filing that once the affected services are grandfathered, it won't accept new orders for the legacy services and "existing customers will continue to receive these services over Verizon's more advanced and reliable fiber facilities rather than copper facilities."

While some of these services may or may not be in heavy demand, the goal now has been to just shut off the copper, even in areas where there is no fiber optic replacement. And this plan is not new.

In 2013, I wrote "Are You in a Shut Off Zone" where I quoted Lowell McAdam, CEO of Verizon detailing a vision of 'killing the copper'.

"But the vision that I have is we are going into the copper plant areas and every place we have FiOS, we are going to kill the copper. We are going to just take it out of service and we are going to move those services onto FiOS. We have got parallel networks in way too many places now, so that is a pot of gold in my view.

"And then in other areas that are more rural and more sparsely populated, we have got LTE built that will handle all of those services and so we are going to cut the copper off there. We are going to do it over wireless. So I am going to be really shrinking the amount of copper we have out there..."

Considering that the company is no longer going to deploy FiOS, then, it would appear that the entire Verizon territory, especially rural areas, may be 'shut off or sold off'.

AT&T's original accounting based on their original FCC IP transition filing stated that at least 25% of the wireline networks would not be feasible to upgrade - so they, too, would be 'shut off' and migrated to wireless.


"In the 25 percent of AT&T's wireline customer locations where it's currently not economically feasible to build a competitive IP wireline network, the company said it will utilize its expanding 4G LTE wireless network -- as it becomes available -- to offer voice and high-speed IP Internet services."


Massive Cross-Subsidies of the Wireless Business

It isn't enough that the companies are going to 'shut off the copper' and that Verizon stopped deploying FiOS. Verizon Wireless has been able to get the state utility to fund their wires to the cell sites.

While each state is different, we documented how Verizon New York's capital expenditure budget was diverted to fund the building of the wires to the cell sites, at the detriment of cities that were either partially upgraded or the company never started.

Thus, Verizon Wireless, a separate legal entity, appears to be using the state utility construction budget to put in fiber optics, but this fiber will be for the wireless company, not for end user customers to have FiOS, fiber to the home.

Conclusion:
  • Verizon has no plans on continuing its FiOS fiber to the home build outs throughout the East Coast, even in Boston.
  • Verizon is cross-subsidizing their wireless business construction budgets via the wireline utility, that should have been used to maintain and upgrade the cities in Massachusetts, and the other Verizon states.
  • Verizon appears to be pulling a bait and switch in Boston, and hasn't told the public what they told investors.
  • Verizon's plan is to shut off as much of the retail copper wires it can and move customers onto more expensive wireless.

And 5G is nothing more than just another super-hyped service that will not show up as advertised, if at all. And this 'tell them anything' about new technology is the norm.

And common wisdom is almost always wrong. Take the plans to have America upgraded to fiber optics by the year 2010.

See the cover of Time Magazine, April 12, 1993. It states:

"Coming Soon to Your TV Screen,
The Info Highway,
Bringing a Revolution in Entertainment, News and Communications

The article goes on to say:


"It's not here yet, but it's arriving sooner than you think. Suddenly the brave new world of videophone and smart TVs that futurists have been predicting for decades is not years away but a few months.... We won't have to wait long. By this time next year, vast new video services will be available at a price to millions of Americans."

The article detailed that the phone companies were supposed to wire America with fiber optics, known as the Info Highway--starting 23 years ago.

It was the common wisdom at the time and it was wrong.

The "Book of Broken Promises" supplies all the gory details about what happened to our digital future.