FiOS and U-verse - It was about engineering.
Now it's about marketing.
The Verizon FiOS/AT&T U-verse story has been an engineering and capital expenditure story for several years; now it is a marketing story. Verizon has what is arguably a superior product, at least in terms of bandwidth delivery, and Verizon has achieved a 3:2 dominance in the market over AT&T. However, in the last three quarters, AT&T has been outselling FiOS by substantial (35%-40%) margins. Why is this happening? This report will look in to some of the marketing differences to seek the answers. It will also explore the many other differences between theses two services.
On May 29, 2003, the then three largest RBOCs (BellSouth, AT&T, and Verizon) announced that they had adopted a common set of technical specifications for the delivery of fiber-to-the-premises (FTTP). In other times, the announcement of the FTTP RFP (and the subsequent RFP for GPONs) would likely have been viewed by most with a big yawn — just another technical standardization. However, in those times, (this was in 2003-05,) this was — and it continues to be today — the biggest news in the telecommunications world, perhaps the biggest in years.
In 2010, this story continues to be the biggest thing in telecommunications. Verizon and AT&T have become, in five short years, major video providers via FiOS and U-verse. They are now both ranked in the top 10 for U.S. video providers. Most of the other companies on that list have been in the video business for decades. We expect that by the end of 2010, Verizon and AT&T will respectively serve 3.5 million and 3.0 million video customers. Also, they both rank consistently at the top of customer satisfaction polls covering video customers.
These two RBOCs serve approximately 80 million of the approximately 150 million access lines (53%) in the U.S., which is the main reason for the excitement. They also control the largest interexchange carriers and the largest cellular phone companies. In short, these two companies are the powerhouses of the telecom world. In a recent year, their capital expenditures were 76% of the total by major telephone companies, and constituted over 46% of all capital spent that year by all telecommunications carriers! Clearly, these companies have the financial power to rule the equipment markets. In addition to providing a head-to-head comparison between FiOS and U-verse, this report will focus on providing a complete background on Advanced Access Architectures (AAAs). It will also consider the progress to date of AAAs (or in some cases the lack thereof), and possible changes in architecture. For the first time, we are going to be considering differences in marketing approaches for the two services, including actual experience in ordering the services.
This report, more than any of our past six reports on the subject, will focus on the following:
Table of Contents
Table of Figures
The Lightwave Network Series of Reports
The Lightwave Network
The Lightwave Series of Reports
General Reports on the Network
General Market Reports
Specific Systems Reports
Introduction
Background
FiOS and U-verse Today – Major Video Providers
Importance
Past IGI Reports on the Subject
This Report
Marketing Approaches of FiOS and U-verse
The Evolution of the Market Structure Today
RBOCs’ Multidimensional Competitive Struggle
Post-merger Competition
RBOC Purchase of IXCs
RBOCs vs. Cable Companies
RBOCs Are Becoming Wireless Access Companies
RBOC Loss of Main Lines
It’s a Wireless Access Industry!
The Wireless Access Landscape
Forecast for Wireline to Wireless
The Super Competitors
Google Attacks – Google Voice
Marketing FiOS and U-verse
Major Market Issues
The 2008-2009 Recession Slowed down Capital Spending
Both FiOS and U-verse have Shown Signs of Slowing Deployment
Overbuild
Other Possibilities for Verizon Overbuild
Marketing Approach of FiOS
Marketing Approach of U-verse
Comparison of Ordering Experiences FiOS vs. U-verse
A Bad FiOS First Experience
U-verse Order
General Comments on FiOS vs. U-verse from a Utilization Perspective
FiOS
U-verse
Summary
FiOS and U-verse - Architectures
Architectural Approaches to AAAs
Capital Costs of FiOS and U-verse
Fiber Requirements for Various Advanced Access Architectures
BellSouth's Fiber to the Curb (FTTC)
U-verse - AT&T's Fiber to the node (FTTN)
FiOS - Verizon’s FTTP (Fiber to the Premise)
Summary of Fiber Requirements
FiOS and U-verse - Modeling Architectural Differences
Fiber Required for Each Architecture
Cost of Fiber Needed for Each Architecture
AT&T’s New Plans for BellSouth – a Hybrid FTTC/FTTN
AAA Costs from Public Statements
AT&T - U-verse
Verizon - FiOS
Summary of Costs
Technologies of FiOS and U-verse
Verizon FiOS Technology
Delivery Technology
Video Technology
AT&T U-verse Technology
Delivery Technology
Video Technology
Bandwidth Requirements and Capabilities
What are the Bandwidth Requirements?
Calculating Bandwidth Requirements
Drivers of Bandwidth Requirements
Bandwidth Requirement 2013 Scenario
Bandwidth Capabilities and Options
The Current Options
FIOS – FTTP Bandwidth Capacity
U-verse
Options for the Needed Capabilities
Pair Bonding
Reduce the Distance
Hybrid FTTN – FTTC
AT&T’s New Plans for BellSouth – a Hybrid FTTC/FTTN
Compression
NGPONs - Advanced Options - 10-GPON and WDM-PON
10-GPON
WDM-PONs
FiOS and U-verse Forecasts - 2010
FiOS and U-verse Forecasts - 2010
Forecasts for Deployment
AT&T
BellSouth
Verizon
FiOS vs. U-verse - Deployment Forecast Summary
AT&T - U-verse
BellSouth
Verizon - FiOS
FiOS vs. U-verse -Forecast Size of Deployments
Forecast of Homes Passed
FiOS vs. U-verse - Penetration Rates
Growth of FiOS vs. U-verse and Reduction in xDSL
FiOS vs. U-verse - Technology Forecast
Forecast Technologies by Type
FiOS and U-verse Vendors
Selected Vendors
Vendors of GPONS
Vendors Listing
Summary of Vendors
Detailed Listing of Vendors
Acterna (acquired by JDSU)
ADC
Adtran
Advanced Fibre Communications Inc. (AFCI) (Now Tellabs)
Alcatel-Lucent
Alloptic Inc
Amino Technologies plc
AOC Technologies
Avanex Corporation
Broadlight
Calix
Cisco
Conexant
Corrigent
Entrisphere Inc. (Acquired by Ericsson)
Ericsson
Fiberxon (Now Source Photonics combined with Luminent)
Finisar Corporation
FlexLight Networks (Defunct)
Fujitsu
Genone3 Technologies Inc.
Hitachi Communication Technologies Ltd.
Humax USA Inc.
Iamba Networks
JDS Uniphase
Kreatel Communications AB (Acquired by Motorola)
LG Electronics
LightComm Technology
Marconi
Microsoft
Motorola
NeoPhotonics
Nortel
Novera Optics (owned by Nortel / LG JV)
OFS
O-Net Communications Ltd
Oplink Communications, Inc.
Optiviva Inc.
Optical Solutions (Acquired by Calix)
Osaki Electric Co. Ltd.
Paceon (Mitsubishi)
Passavé (Acquired by PMC-Sierra)
PMC-Sierra
Quantum Bridge Communications (Acquired by Motorola)
Salira Optical Network Systems
Scientific-Atlanta (Cisco)
Siemens
Source Photonics (Combined with Fiberxon and Luminent)
Tandberg Ltd. (Ericsson)
Tellabs
Terawave (Acquired by Occam Networks)
Tut Systems (Acquired by Motorola)
Vinci Systems, Inc. (Acquired by Tellabs)
Appendix I – IPTV and Approaches to Video Delivery
Broadcast
IPTV
IPTV Architecture
IPTV Global Architecture
Super Hub Office
Video Hub Office
Serving Offices
IPTV Distribution and Access Architecture
IPTV Channel Selection
Table of Figures
Figure 1, Lightwave Network
Figure 2: Summary of Competitive Position
Figure 3: Revised Competitive Structure Due to IXC Purchases
Figure 4: RBOCs Subsume IXCs and CLECs
Figure 5: RBOCs vs. Cable Companies
Figure 6, Telcos vs. Cable Companies – 2010
Figure 7, Verizon Wireline vs. Data Revenues
Figure 8, Verizon Loss of Main Lines vs. Data Revenue
Figure 9, Wireless Competition
Figure 10, Forecast for Wireline to Wireless Migration
Figure 11, The Super Competitors
Figure 12, Google as a Serious Threat
Figure 13, Predominant Advanced Access Architectures
Figure 14, BellSouth FTTC
Figure 15, AT&T U-verse (FTTN)
Figure 16, Verizon FiOS (FTTP)
Figure 17, Fibers Required per Year for Each Architecture
Figure 18, Amount of Fibers for the Architectures
Figure 19, Length of Fiber for the Architectures
Figure 20, Fiber Costs of the Three Architectures
Figure 21, Fiber Cost per customer - Each Architecture
Figure 22, AT&T - BellSouth Hybrid FTTC
Figure 23, Fiber Required Upgrading to Hybrid FTTC
Figure 24, Annual Costs of AAA
Figure 25, PON – Central Office Portion
Figure 26, PON – Outside Plant Portion
Figure 27, Wavelength Assignments - FiOS
Figure 28: Bandwidth Needs — Forecast Through 2013
Figure 29, Drivers of Access Bandwidth Requirements
Figure 30, Usage Scenario - 2013
Figure 31, 2013 Bandwidth Requirements
Figure 32, Forecast Access Bandwidth Requirements 2013
Figure 33, Comparison of Internet Access Speed Offered
Figure 34, PONs' Bandwidth Capacity
Figure 35, VDSL2 Bandwidth vs. Distance
Figure 36, AT&T - BellSouth Hybrid FTTC
Figure 37, Fiber Required Upgrading to Hybrid FTTC
Figure 38: Forecast Homes Passed Cumulative — All Technologies
Figure 39: Forecast Homes Passed Annually — By Company — All Technologies
Figure 40: FTTX vs. High-speed Accesses vs. US Households
Figure 41, AAA Growth vs. Legacy XDSL
Figure 42: Technology Type Cumulative — Forecast
Figure 43: Forecast Technologies — Homes Passed — Annual
Figure 44: Forecast Homes Passed — PONs vs. Other Technologies
Figure 45: Verizon PON Forecast
Figure 46: AT&T PON Forecast
Figure 47, Originally Selected Vendors
Figure 48, Newly Selected Vendors
Figure 49: GPON Selected Vendors
Figure 50, Summary of Vendors
Figure 51: Broadcast TV on BPONs
Figure 52: Broadcast TV
Figure 53: IPTV General Architecture
Figure 54: IPTV Global Architecture
Figure 55: IPTV Access Architecture
Figure 56: FTTP Architecture for IPTV
Figure 57: IPTV Hub Office Architecture
Figure 58: IPTV Channel Selection
