Verizon's Shammo: 50 Mbps is FiOS' sweet speed spot

Reaffirms copper-to-fiber transition initiative

February 26, 2013 | By Sean Buckley

Verizon (NYSE: VZ), like other established broadband service providers, is aware of Google's (Nasdaq: GOOG) 1 Gbps FTTH experiment, but delivering those speeds is not an immediate concern.

Fran Shammo, EVP and CFO of Verizon, said on Monday during the Morgan Stanley Technology, Media & Telecom Conference that they don't hear customers demanding Gbps broadband speeds.

"FiOS brings a very different perspective to the household with Fiber to the Home," he said. "We actually tested a 1 Gig circuit in New York three years ago so our FiOS product can deliver that but we just don't see the need yet from a household to have that much of a pipe into their home."

That's not to say that Verizon isn't being aggressive on the speed front. Last summer it introduced its FiOS Quantum product suite, which offers a 300 Mbps tier. The Quantum suite includes three other tiers: 50/25, 75/35, and 150/65 Mbps.

In an effort to entice more existing FiOS customers to subscribe to the higher tier products, Verizon launched a plan that will allow subscribers to upgrade to the 50/25 Mbps introductory Quantum tier for an additional $10 a month.

As it migrates more of its so-called "chronic" copper customers-- those that have more than three truck rolls a year--to fiber, Shammo said that they are purchasing not only higher speeds, but also more services like TV.

"With Quantum, we're allowing customers to buy up to the speed they want, including 300 Mbps for those who want it," he said. "What we're seeing as copper to fiber migrates, customers are buying up to that speed, and it looks like the speed that most customers are buying up to is 50 Mbps. That seems to be the sweet spot in the industry right now."

Shammo added that as consumers begin to use more connected devices in their homes, the telco will be able to address those needs with minimal investment "because I already put the fiber to the prem."

Verizon's copper to fiber migration was accelerated in late 2012 after Superstorm Sandy damaged a large portion of its copper wiring in New York City and New Jersey. Lowell McAdam, Verizon's CEO and chairman said during a recent investor conference that it will accelerate the migration of customers on its copper facilities to fiber in 2013.

In 2012, Verizon converted about 200,000 customers to fiber, but that number might be a bit higher due to Sandy's impact.

"The copper to fiber migration is another strategic initiative we're making to improve the wireline margin by reducing the cost of maintaining that copper plant," Shammo said.