Verizon Communications has chosen Advanced Fibre Communications as its lead supplier of fiber-optic equipment to deliver broadband to millions more homes and offices.
Verizon on Monday said that it also will use equipment from Sumitomo Electric Lightwave, Pirelli Communications Cables and Systems North America, and Fiber Optic Network Solutions, or FONS. Financial terms of the deal were not disclosed.
U.S. telephone companies BellSouth and SBC Communications are expected to soon announce similar contracts for fiber-optic equipment to cover the so-called "last mile" between their nationwide networks and individual homes and offices, sources familiar with the companies' plans said.
BellSouth, Verizon and SBC are planning a major shift in the way they deliver broadband. They now rely mostly on copper-based DSL (digital subscriber line) equipment. However, the three telephone companies say they want fiber's glass medium because it creates a broadband service about four times the speed of DSL and at a cheaper cost.
The companies hope fiber optics will help them catch up to cable companies, which have a strong lead in the market for U.S. broadband subscribers. During the quarter ended Sept. 30, cable companies accounted for 64 percent of the overall U.S. residential broadband market, while DSL garnered the remaining 36 percent, according to market researcher Leichtman Research Group. DSL added 800,000 subscribers, or 39 percent of new broadband customers, while new cable subscribers made up the remaining 61 percent, according to the same study.
Verizon's announcement marks a shift in the company's capital spending emphasis. Verizon is using money it normally would have spent on DSL or long-distance network equipment to fund the fiber expansion. A Verizon representative said the installation of its DSL and long-distance networks is nearing completion.
"Our customers are telling us they want faster speeds and more data-transfer capacity," Verizon Vice Chairman Lawrence T. Babbio Jr. said Monday during a UBS Global Communications conference in New York. "We believe our deployment of this technology will have widespread benefits throughout the economy of our nation by stimulating products that can only be delivered over this platform."