Verizon says on track with FiOS targets

By Ritsuko Ando

NEW YORK (Reuters) - Verizon Communications Inc. (VZ.N: Quote, Profile, Research, Stock Buzz) is on track with spending and roll-out targets for its FiOS high-speed fiber network for video and Internet services, Chief Operating Officer Denny Strigl said on Wednesday.

His comments came after AT&T Inc. (T.N: Quote, Profile, Research, Stock Buzz) said earlier this month that it would have to spend more than initially planned for its Internet and video service called U-Verse, and that it would target fewer homes for the end of 2008.

"Essentially, we are on plan," Strigl said at the Reuters Global Technology, Media and Telecoms Summit in New York. "There is no change to any of the guidance we gave, whether it be homes passed or dilution."

Verizon, the No. 2 U.S. phone company, has said it plans to invest $18 billion from 2004 through 2010 to build the FiOS network and make the service available to 9 million homes by the end of the year, and 18 million by the end of 2010.

Analysts have said Verizon was showing a stronger start in deploying advanced video and Internet services than AT&T, although some investors have been wary of its spending plan.

Verizon boasts an all-fiber network, which is seen costing around three times as much as AT&T's network, which makes use of some existing copper lines.

Strigl said expenses for deploying FiOS were falling. The company has forecast the average cost of offering FiOS to each home to fall to around $700 by 2010 from around $900 in 2006.

"I think eventually we can get to the $500 figure," he said, when asked whether the company could reduce the cost to those levels. He declined to give a timeline for that.

He defended Verizon's choice to use an all-fiber network by saying it was crucial to ensuring consumers are always able to enjoy high-speed Internet and new programs. AT&T's fiber network does not extend to every home, but stops at 'nodes.'

"We think what we are paying for now, to take fiber to the home as opposed to the node, is the right strategy, and eventually, those who only take it to the node will take it to the door at some future point," he said.

Strigl also reiterated the company's target to sustain wireless profit margins in a range of 43 percent to 45 percent. Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc (VOD.L: Quote, Profile, Research, Stock Buzz), had a first-quarter margin of 44 percent.

Verizon shares rose 20 cents, or 0.5 percent, to close at $42.74 on the New York Stock Exchange.