Quote Originally Posted by recoveryone View Post
interesting info Woo on the Fios dead end, I guess the dollars have been spent down here in Socal. Verizon is stringing fiber Optic lines everywhere in my area and my mail box gets hit weekly with ads about upgrading to the service. I currently have the triple play package phone/internet/Direct TV setup. I am looking forward to move over to the fios just for the increase in bandwidth. I don't do any streaming or I should say used netflicks, but I have so many wifi devices on my home network my 5.1 d/l is barley hanging on when I am gaming along with the wife on her laptop and daughter and one of my sons D/l music, not to mention the the three squeezeboxes, three BDP, garage server, upstairs media computer and now with Direct TV Full network home service for the 4 boxes I have. DSL is topped out around 7Mbps( what is what I have, but only get 5.2 on the best days that info is explained in the small print your range can vary from 4.5-7.0Mbps) so I'm not sure what Verizon, At&t will do against the cable competition if they are giving up on highspeed bandwidth.
The issue that Verizon ran up against is similar to what bankrupted other broadband startups during the dotcom implosion -- high capital costs do not go well with a low margin service that has high support costs. No question that fiber has a huge performance boost compared with DSL and cable, but most consumers are not going to pay stratospheric prices to get that higher speed.

Whereas DSL and cable simply piggyback onto existing residential copper wires, FiOS requires an end-to-end fiber run. This ain't cheap, and when you add customer support costs, the margins for the service get squeezed.

Verizon budgeted over $20 billion for their fiber network, but they've already blown through most of that and huge gaps in their network remain. That's why they put an end to their FiOS expansion, and focused their energies on existing markets.

I think that most households are content with DSL speeds, especially with service rates starting around $20/month, and my 3.0 Mbps service costs around $30/month. I think FiOS service (without bundling) costs around $60/month.

With FiOS TV though, you are getting the best picture quality among the different pay TV options.

Quote Originally Posted by recoveryone
The profit margin will always be in the cell phone side of the house as they can regulate or dictate what the market does and each year they are squeezing out more and more smaller companies (Wal Mart effect). The only thing saving us now from being monopolize on who we have to deal with is that old law suit that force Ma Bell to break up and gave Verizon, MCI and few others their start in the telecommunication market.
You're right that the profit is on the cell side of the business, since the device subsidies are built into marketing and costs. If the ATT/T-Mobile merger goes through, we're down to 3 national cell carriers. Then again, on the residential broadband side, 5 providers control over 92% of that market.

As far as Ma Bell goes, keep in mind that Verizon was formed by the merger of Bell Atlantic (one of the Baby Bells formed by the AT&T breakup) and GTE (a quasi-Baby Bell that operated independently of AT&T in several markets during the Ma Bell era). The original anti-trust action against AT&T was launched by the feds in 1974, and they fought it for years. AT&T finally agreed to breakup terms because doing so would allow them to enter the emerging cellular and PC markets.

In those days, long distance phone service was the high margin monopoly AT&T was trying to protect. But, they saw the writing on the wall, and saw dollar signs with the PC and wireless markets. The cell phone business is entering a similar period, where the major providers are fighting tooth and nail to keep from becoming a low margin "dumb pipes" provider. They're trying to maintain high margins by minimizing infrastructure investment (i.e., AT&T's merger with T-Mobile is basically an infrastructure deal, because AT&T can simply take over T-Mobile's 4G LTE network without building their own) and milking existing revenue sources as much as possible (i.e., a myriad of confusing contracts, data, voice, and text plans)