The web lit up this week with stories about the FCC’s Seventh Report on the availability of broadband capability to Americans. (A pdf of the report is available here. See Ars Technica here for a typical story.) Commenters have repeated the same old complaints about slow speeds and slow deployment. It reminds me of commenters in the FCC’s national broadband plan proceeding who demanded minimum broadband throughput of 100 mbps. Some commenters imply that broadband service providers are “evil” for not deploying fiber-to-the-premises (FTTP). Other commenters think government should build fiber networks. Neither is very realistic.
The performance of Verizon’s FIOS service demonstrates that the business case for deploying FTTP just isn’t very attractive. Verizon apparently invested $23 billion in FIOS. Unfortunately for Verizon, it appears it’s losing money on that investment. Although Verizon denies losing money on FIOS, it has stopped investing in it. Despite its very high throughput and reliability, consumers aren’t subscribing to FIOS in large numbers, and only a small portion of Verizon’s revenue comes from FIOS. The vast majority of Verizon’s revenue and subscribers come from Verizon’s wireless business. Let’s take a look at the numbers from Verizon’s Q1 2011 earnings results. Read the rest of this entry »