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Reason Foundation

Did Verizon make the right bet?

Steven Titch
August 16, 2006, 2:27pm

The Wall Street Journal says today that a report from CableLabs, the R&D consortium owned by the cable companies, suggests that Verizon's fiber-to-the-premises (FTTP) may be better geared to handling future consumer bandwidth requirements than the hybrid fiber-coax platforms the cable industry currently uses. The findings conclude that cable networks may have to upgrade their own networks with FTTP schemes and that such plans, while capital intensive, maybe the most cost-effective in the long run. The report should serve as another wake-up call to groups doing their best to frustrate cable competition by opposing laws that ease franchise restrictions and allow phone companies faster entry into the market. We've already seen that when barriers to entry fall, consumers see lower prices and greater service availability . Now the cable industry, of all sources, is saying competition stands to bring consumers a better service experience. Coming as it does from the opposition, it helps validate Verizon's decision to pursue its $20 billion FTTP plan, although Wall Street and the business press expressed doubts as to whether it could generate the return to justify its investment. The company is seeing market uptake, however. For example, it has captured some 25 percent of the market in North Texas in less than a year. CableLabs believes the technology's true value will be apparent several years down the road, as on-demand video services from aggregators like YouTube and Google become more popular.


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