Verizon picks AFC for FTTP

FRAMINGHAM (11/17/2003) - As expected, Verizon Communications Inc. has tapped Advanced Fibre Communications Inc. (AFC) as one of four vendors to supply fiber-optic and electronic equipment for Verizon's Fiber-to-the-Premises buildout.

AFC will provide the central office and premises optical electronics for the project, also known as the "active" elements of FTTP technology. In addition, Verizon has selected Sumitomo Electric Lightwave Corp., Pirelli Communications Cables and Systems North America Llc and Fiber Optic Network Solutions Corp. to provide the fiber-optic cabling and other outside plant equipment - the "passive" elements -- for the project.

In addition to these three outside plant suppliers, Verizon is continuing contract negotiations with several other passive element vendors.Verizon will invest in FTTP next year without an increase in capital spending levels, says Verizon Vice Chairman and President Lawrence Babbio. Babbio discussed his company's plans at the UBS Warburg Global Communications Conference in New York this week.

The carrier plans to shift spending from copper deployments, such as DSL, to FTTP in order to fund the buildout. Last spring, a Verizon executive said the carrier plans to take some of the US$500 million earmarked for DSL deployment this year and shift it to FTTP. Babbio said he expects Verizon's wireline capital expenditures to be $7 billion this year, and that 2004's levels will be flat to down from 2003.

Verizon's initial FTTP deployment plans involve passing about 1 million homes in 2004, Babbio says, with the deployment pace potentially doubling in 2005.

Verizon will install FTTP in two ways: directly connecting existing homes and businesses to the company's network as they order services that use the new technology; and installing fiber-optic lines to many new residential developments and business premises as they are being built. Babbio stressed, however, that progress will be gaited by the FCC and the policies it enacts, such as whether Verizon's competitors will be allowed access to these new broadband facilities.

"The FCC must further clarify the rules it recently released" in its Trennial Review, Babbio said in his UBS Warburg address. "It is imperative, for example, that we receive assurances that we will not be forced to share our investment in this new technology with our competitors, as is the case with copper facilities today. This sort of regulation will only serve to deter our investment in these new technologies."

Verizon will continue performing lab and technology interoperability tests on the FTTP systems during the fourth quarter of this year. In the first half of 2004, Verizon expects to begin initial test deployments in at least two communities. By year-end, the company expects to deploy the new technology in over 100 central offices across nine states.

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