Verizon

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Verizons FTTP ProgramFiOS
John Schommer Director BB Prod Devlp Verizon
Communications
IDATE DigiWorld Summit 2007
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Who is Verizon?
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Verizon US Footprint
Verizon Communications Inc. is a leader in
delivering broadband and other wireline and
wireless communications innovations. Serving
63.7M wireless customers, 8M Broadband customers,
and providing 46M wireline access lines.
Verizons revenue exceeds 90B annually.

• 63.7M Wireless Subscribers
• 8.0M Broadband Subscribers
• 1.3M FiOS Data subscribers
• 717k FiOS Video subscribers
• 46M Access Lines
• 90 Billion in annual Revenue

Organizational Structure

• National Organization
• Speed to Market
• Innovation
• Drive efficiencies through automation
• Convergence
• Regions
• Local Marketing Sales Tactics
• Operational Excellence
• Outstanding Service
• Competitive Cost Structure
• Revenue and Margin Accountability

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Verizons Network
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Verizon FTTP Generic Architecture
Super Head End (SHE)
Super Head End (SHE)
Customer Premises
gigE
Central Office - Video Hub Office
550 MHz
860 MHz
42MHz
Analog TV Digital TV HD/VOD
1550 nm Video
Optical Splitter
32x1
EDFA
ONT
OLT
Optical Coupler (WDM)
1490 nm Voice Data Downstream
Central Office - Video Serving Office
1310 nm Voice Data Upstream
EDFA Erbium Doped Fiber Amplifier OLT Optical
Line Terminal ONT Optical Network Terminal
BPON GPON Downstream 622
Mbps 2.4Gpbs Upstream 155 Mbps 1.2Gpbs
Shared among a maximum of 32 customers, typically
640 customers per OLT
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FTTP Deployment
Small Businesses
Circuit Switch
OLT
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FTTP Deployment

• Aerial
• Place new fiber along aerial poles
• Buried
• Place innerduct and fiber in existing or new
  developments
• Public Rights of Way
• Use existing utility infrastructure and occupancy
  rights

• Key Facts
• Passing a premise with buried plant is almost
  twice as expensive as passing a premise with
  aerial cable
• Cost per premise passed is under 800 (costs are
  decreasing and Verizon is on target to reach its
  sub 700 goal by 2010)
• Cost per premise connect is under 700 (costs are
  decreasing and Verizon is on target to reach its
  sub 650 goal by 2010 target)
• Cable Maintenance costs on fiber is a fraction of
  traditional cable maintenance

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FTTP Deployment Rate

• Verizons first FTTP customer was in September of
  2004. 3 years later,
• 8.5M households passed
• 6.5M households Open for Sale,
• gt1.3M Data subs, gt700k video subs
• Data penetration already exceeds 20
• Video penetration already exceeds 15
• Product Churn lt1.5/mo

M HH
M HH
M HH
M HH

• By 2010, Verizon will pass 18M Premises with
  fiber
• Premises Open for Sale lags Premises Passed due
  to negotiation interval to obtain MDU access
  agreements
• Why doesnt Verizon build at a faster rate?
• To avoid a massive staffing bubble
• Provides time to work franchising arrangements
  prior to build

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Verizon FiOS Product Offers
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FiOS Internet Data Service
Todays Service
2008 Potential Enhancements

• Service Speed and Performance
• More Competitive Areas
• FiOS Ultimate 50M down, 20M up
• FiOS Premium 20M down, 20M up
• FiOS Enhanced 20M down, 5M up
• FiOS Internet 10M down, 5M up
• Less Competitive Areas
• FiOS Ultimate 30M down, 15M up
• FiOS Premium 15M down, 15M up
• FiOS Enhanced 15M down, 2M up
• FiOS Internet 5M down, 2M up
• Ancillary Services
• Web Mail 4 GB storage, 9 addresses, 25M
  Attachment size
• 10 M Personal Web Space
• Email alerts on your mobile phone
• High-end Wireless Router
• Home Network Installation
• PC Optimization

Speed Focused Applications
Enhanced Portal
Value Added Servics
Wireless Integration
Personalized Controls
Premium Support
Stand Alone, Bundled, Packaged
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FiOS Video Service
Todays Service
2008 Potential Enhancements

• High Quality Television
• FiOS TV Local 15-35 chnls, 12.99
• FiOS TV Premier 160 chnls, 42.99
• La Conexion 115 chnls, 32.99
• Packages (requires STB)
• Sports 15 chnls, 5.95
• Movies 44 chnls, 12.99
• Sports/Movie 59 chnls, 15.99
• Spanish Language 25 chnls, 11.99
• Premiums (requires STB)
• HBO 15 chnls, 15.99
• Cinemax 12 chnls, 15.99
• HBO/Cinemax 26 chnls, 25.99
• Video On Demand (via IPTV)
• New Releases, 3.95 ea
• Library, 2.95 ea
• Free Content
• Widgets (weather, traffic, etc)
• Karaoke

FiOS TV Portal
Enhanced TV
Gaming
Wireless Integration
Personalized Controls
Premium Support
Stand Alone, Bundled, Packaged
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FiOS Bundles
Bundle prices vary from time to time
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Industry/Market Trends
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Broadband Usage for Todays Applications
Application Evolution
HDTV
Core Services Differentiators Facilitate
Communications Entertainment and Enablers of
moving subscribers to other services.
Internet Appliances
IPTV
Online gaming
Yellow
High
VoIP
NAS Media Storage
Home Monitoring
VOD
Green
Music downlds
Home netwrkg
Video Conf/Chat
Streaming Radio
Video Streaming
Blue
Internet Storage
Value-Add
Video mail
Internet/ PC Security
Email
Photo sharing
Purple
Online shopping
Video Distrib
Low
Web surf
10.0
7.0
gt 10.0
3.0
1.0
5.0
Low
High
Broadband Usage
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High-Speed Market Outlook

• Over The Top providers have found niches for
  selling video to the home (Movielink, Cinemanow,
  etc.), however much of this content is viewed on
  the PC.
• Sony and Microsofts gaming consoles have enabled
  simplified means of moving VoD content to the
  Television.
• Major retailers have recently committed to video
  distribution via IP (eg. Download full SD and HD
  movies via the web)
• OTT Broadcast Video IP-video distribution using
  P2P (SD/HD) will heavily tax existing networks
  (Cable Telco)
• Upstream bandwidth will become a huge
  differentiator as we move to Web 2.0.
• HD IPTV will become the application that drives
  Internet Service Providers to adopt a new service
  model.
• FTTP Networks will be much better suited to
  sustain such traffic volumes, although eventually
  new service models will need to be explored.

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• Questions