Verizon’s McAdam: Fiber expansion could help us win back SMB customers from cable

Verizon is aware that in order to thwart cable’s attack on the small to medium-sized business (SMB) segment, it’s going to have to deploy more fiber outside of its traditional ILEC footprint.

The service provider will leverage a similar method it is taking in Boston, where it will multitask the fiber rollout to satisfy business customers and set the stage for its next-gen 5G wireless rollout.

Lowell McAdam, chairman and CEO of Verizon, told investors during the UBS 44th Annual Global Media and Communications Conference that it plans to deploy more fiber out of its East Coast territory to win new SMB customers.

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An initial focus of any new fiber deployments would be to bring it to areas where it only has copper facilities.

Cable has been able to continue to take SMB share from Verizon and other telcos. “We have lost some share in the small to medium business market to the cable companies because providing DSL services isn’t enough for them,” McAdam said. “Going back in and taking that market back is a good opportunity for us.”

Public, private approach

In making its decision of where to go next with its fiber for SMB customers, Verizon would like to establish relationships with cities similar to its public-private partnership in Boston. Verizon established an agreement with the city via a $300 million, six-year investment plan that will replace the city's aging copper network infrastructure with fiber.

As part of its buildout strategy, Verizon will install the fiber throughout the city on a neighborhood basis.

While McAdam would not specify any specific markets Verizon is targeting, he said the telco is speaking with other cities that would like to engage in a similar agreement.

“Mayor Walsh in Boston deserves a lot of credit because he is taking the approach if I partner with businesses, we will provide a platform for more businesses to grow within Boston,” McAdam said. “There are a lot of cities [that] we are having similar conversations with right now and I think there’s a little less of a war on business mentality from politicians than there was a year ago.”

Out-of-territory expansions

Unlike its FiOS deployment which was focused on just serving consumers, Verizon envisions a new common architecture that can satisfy multiple purposes: consumer, wireless, and businesses.

Take Chicago. The service provider said that by deploying fiber in that market it can simultaneously support the demands of its current 4G and upcoming 5G wireless networks’ backhaul needs.

While Verizon’s wireline footprint is now relegated to the Boston-to-Washington, D.C., corridor, the service provider sees opportunities to extend fiber into other territories where it does not currently have wireline facilities or has fiber indefeasible rights of use (IRU) leases with other providers for its wireless and enterprise segments.

In order to make a successful out-of-territory build, McAdam said that the telco would need to get cooperation from city and town leaders.

“I think that it’s going to take a while to change the mindsets in the political realm for cities to work better with us in that Boston-to-Washington corridor,” McAdam said. “We see a lot of opportunity outside of that footprint and there’s no reason for us to be constrained.”