Arguing in favor of telecom regulation, some people say that telephone networks are owned by the public, which was forced to pay for them as captive ratepayers. The upshot is that telecom firms therefore shouldn’t be able to restrict competitors from using their wires.
As my colleague and co-blogger James Gattuso has explained in some detail, this historical analysis is deeply flawed. Today’s networks are “overwhelmingly the product of recent private investment,” concludes Gattuso.
But for those seeking more proof that private investment in building network capacity continues to be robust, today’s Wall Street Journal covers Verizon’s hugely expensive effort to bring super-high-bandwidth fiber into the home.
Verizon executives see the new network, called FiOS, as a chance to reposition the telecom giant into more of an Internet-based company — one that can supply a raft of digital services under one roof. The plan is to offer a host of new services to run on FiOS, some of which are still in the development stages. The company is targeting everything from online games and local news shows to movie downloads and music-mixing sites. With FiOS’s ability to carry huge amounts of data at warp speed, Verizon is betting that the network will be a magnet for subscribers and advertisers alike.
Many on Wall Street say Verizon’s fiber rollout is too risky:
Investors, however, remain generally uneasy about Verizon’s costly fiber initiative — even though some think the new content might eventually bring in major revenue…. John Santo Domingo, a portfolio manager at New York hedge fund Acero Capital Management LLC, says one of the reasons his firm doesn’t hold any Verizon stock is because it thinks the company’s strategy is too risky. “It’s a very capital-intensive endeavor they’ve undertaken,” he says. “You don’t know what the industry is going to be like by the time [FiOS] is fully deployed. There’s a lot of uncertainty.”
Verizon’s plan is to use its speedy new network to deliver digital services to households: phone, television, games, and so on. It hopes to gain enough service subscribers to recoup its $18 billion infrastructure investment.
That’s a risky bet, but if it pays off, Verizon deserves the reward. That’s the best way to ensure that more Americans get access to the stunning speeds that fiber offers.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
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