Though fiber circuits can be costly, they're significantly cheaper per megabit than conventional access lines and much more scalable. In the New York area, a typical 1.5-Mbps T1 line costs about $500 a month, compared with $1,300 a month for a 10-Mbps Optimum Lightpath line. Verizon, too, already has the beginnings of a customer base for 10-Gbps fiber optics. Those superfast links mean clearer VoIP calls, faster access to real-time data, and, potentially, support for bandwidth-hungry video.
While Verizon's and AT&T's decisions to replace their copper infrastructure with fiber are seen by some as risky, the carriers had little choice, as they were bleeding customers and wireless still isn't a viable broadband option. Verizon estimates it will spend almost $23 billion between 2004 and 2010 on fiber optics. The pay of several of its top executives, including CEO Ivan Seidenberg, is tied partly to how well the company meets certain objectives for its fiber rollout.
Complicated service offerings, difficult integration, and confusing pricing have held many companies back from buying fiber optic services. "Simplification is absolutely necessary," says Forrester Research analyst Lisa Pierce. Verizon will need to offer uniform pricing and functionality regardless of where a business customer is located, she says. However, just as FiOS has been rolled out block by block, town by town, so will some of Verizon's business fiber services.
Verizon sees fiber as the future. It's challenge will be to make it simple and cost-effective enough for businesses to join its vision.