Is it 2010 again? That was our first thought when we saw the announcement this past week that Verizon was expanding FiOS in Boston. Specifically, the carrier announced it would be “replacing its copper-based infrastructure with a state-of-the-art fiber-optic network platform across the city.”
The company will invest $300 million in the project in six years (remember Verizon is big customer of Dycom Industries, a fiber installation engineering company). Verizon is already technically IN Boston but in a very limited way (get ready Dorchester they are coming your way!).
Boston is an interesting city because in addition to being one of the donut holes of Verizon’s FiOS footprint (Baltimore is too), it has been a city they have talked a lot about when it comes to its wireless small cell push. I don’t think this is a coincidence. Fiber is KEY to its small cells and VZ is very serious there.
So while wireline is still important to them, no question. Math would dictate (remember wireline for Verizon is less than 10 percent of its combined operating income) many of these recent “wireline moves” by Verizon (think XO acquisition, FiOS push, etc) may be more related to wireless than anything.
EDITOR’S NOTE — Fritzsche is the senior analyst/managing director of Wells Fargo Securities. This is an excerpt from one of her Equity Research notes.