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Verizon bets on replacing telephone lines with fiber-ag


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                                                                                                             NATIONAL                                                                                                             MONDAY, JUNE 12, 2006

Verizon bets on replacing                                                                                                                                                                                              Insurance
                                                                                                                                                                                                                     limbo delays
telephone lines with fiber                                                                                                                                                                                             rebuilding
                                                                                                                                                                                                                             By RUKMINI CALLIMACHI
         By PETER SVENSSON                                                            about 400,000 homes connected
                                                                                                                                                                                                                               ASSOCIATED PRESS
          ASSOCIATED PRESS                                                            as of April.                                                                                                                       NEW ORLEANS — The own-
                                                                                         “This is a once-in-a-lifetime                                                                                               ers of the sagging, flood-stained
    MASSAPEQUA PARK, N.Y. —                                                           project,” said Paul Lacouture,                                                                                                 home aren’t in. Above the front
Lisa Donohue squats on the floor                                                      Verizon’s vice president of engi-                                                                                              door, a banner explains their ab-
with her 2-year-old son Calum                                                         neering and technology.                                                                                                        sence, and the lack of progress:
in front of their high-definition                                                        Chief among fiber’s advan-                                                                                                  “Allstate paid $10,113.34 on this
TV, watching a children’s cartoon.                                                    tages is its almost unlimited ca-                                                                                              house for storm damage.”
    “What kind of animal is                                                           pacity to carry information,                                                                                                       Like the home next to it and
Franklin?” she asks him. Calum                                                        which Verizon only nibbles at                                                                                                  the one after that, the house was
is a little under the weather, and                                                    with its current system: It lights                                                                                             disemboweled nine months ago
his eyes droop a bit, but they stay                     Photo by Mark Lennihan | AP   fiber to the home with just three                                                                                              by Hurricane Katrina. The force
fixed on the turtle on the screen.     AVerizon lineman grips the strands con-        laser beams, though the fiber can                                                                                              of the gushing water punched the
    Calum probably doesn’t know,       tained in a fiber optic cable in Massape-      carry many more.                                                                                                               refrigerator into the kitchen wall,
but the image of Franklin’s bright     qua Park, N.Y.                                    The single beam that carries                                                                                                and it still sits leaning through
green skin is brought to him not                                                      video (the others carry data and                                                                                               the house’s broken ribcage. In-
by cable, satellite, or broadcast,                                                    telephone calls to and from the                                                                                                side, mud has hardened into a
but by pulses of light that go         clear line of sight to the satellite,          home) has more capacity than an                                                                                                crusty carpet, covering a design-
straight to his home here on sub-      she says.                                      entire coaxial cable of the kind                                                                                               er sofa and a leather swivel chair.
urban Long Island from a tele-             The family pays about $220 a               used by cable companies.                                                                                                           “I want people to drive by my
phone-company building miles           month for TV, phone, high-speed                   In practical terms, that means                                                                                              home and decide for themselves:
away, via optical fiber.               Internet service and two cell                  better image quality, because the                                                                                              Could I repair this for $10,000?”
    Optical fiber — strands of glass   phones, which she says is cheap-               digital TV channels don’t need to                                                                                              asks Eric Moskau, the home’s ex-
15 times thinner than a human          er than what they were paying                  be degraded to save bandwidth.                                                                                                 iled owner who had over $1.2 mil-
hair — have been used by               before, when they had cable.                      “If you’re watching a program,                                                                                              lion in coverage on his 3,000-
telecommunications companies               “It comes as one bill, which is            you see the faces elongate, smear                                                                                              square-foot home.
over long-haul routes since the        nice because I don’t have to re-               out” on digital cable, says Alex                                                                                                   Behind the sign he hung from
1980s.                                 member to pay four times,” Dono-               Fazi, who as owner of a videog-                                                                                                his porch is a story all-too-com-
    Now, Verizon Communica-            hue says.                                      raphy studio in nearby Wantagh                                                                                                 mon in this once-posh neighbor-
tions Inc., is making a big and ex-        Factors like that have made                has a keen eye for video quality.                                                                Photo by Mark Lennihan | AP   hood of pummeled homes: Even
pensive bet on replacing the net-      Verizon’s FiOS TV a success in                 He said he’ll sign up for fiber TV   Lisa Donohue and her son Calum, 2, watch cartoons at their home in Massapequa             New Orleans’ affluent homeown-
work of copper wires that has          the few areas where it’s available,            as soon as it’s available in his     Park, N.Y.The Donohue’s television signal comes to the house over a fiber optic ca-       ers, who thought they had done
provided phone service since the       judging by Verizon’s data. It has              area.                                ble installed recently by the Verizon phone company.                                      the right thing by properly insur-
19th century with fiber, giving it     said that 6.5 percent of house-                   In a similar way, fiber pro-                                                                                                ing their investment, are finding
the capability to carry TV and su-     holds in Massapequa Park signed                vides almost limitless Internet                                                                                                that technicalities are keeping
per-fast Internet service in the       up for TV in the first three                   connection speeds. With current      though: Verizon already raised             with fiber,” Lacouture said.                   them from securing enough from
bargain.                               months after its launch on Jan.                technology, Verizon could provide    them once (from 5 mbps to 10                   Verizon expects to cut costs               their insurers to rebuild.
    Investors have been skeptical      24. That figure is disputed by Ca-             download speeds of 644 megabits      mbps at the lowest tier) in New            for its outside equipment by 40                    The insurance industry says it
of the plans, sending Verizon’s        blevision Systems Corp., the in-               per second, a bigger step up from    York, New Jersey and Connecti-             percent by switching to fiber. But             has settled over 90 percent of its
stock down by about 20 percent         cumbent cable company, which                   DSL at 1.5 mbps than DSL is a        cut — the three states where it            to get there, it has to spend big.             Hurricane Katrina claims, prov-
since the rollout started last year,   said it had a net loss of less than            step up from dial-up.                competes with Cablevision, a                   Verizon’s average cost of                  ing it’s meeting its obligations to
and other phone companies have         2 percent in the area.                            But for now, the maximum          technologically sophisticated              pulling fiber down a street was                policyholders. But consumer ad-
not made the same gamble.                  Verizon has permission to sell             speed Verizon sells is 30 mbps       company that provides down-                $1,400 per home at the beginning               vocates say insurers settled nu-
Donohue, however, is happy with        TV service in about 80 commu-                  for small businesses, or 20 mbps     loads at up to 30 mbps.                    of last year, not including the cost           merous claims for only a fraction
the service Verizon calls FiOS.        nities in New York, Florida, Mass-             for homes.                               Apart from capacity, fiber has         of actually connecting the homes.              of the actual damages, using nu-
    “With cable, the picture would     achusetts, Maryland and Vir-                      “Right now there are not a lot    the advantage of being immune              The target cost this year is $890              merous exclusions to reduce pay-
stop. Or we’d have those digital       ginia. It has fiber available for              of applications online that de-      to interference and crosstalk, and         per home, reflecting improve-                  outs. Insurance modeling firm ISO
things going,” she says, gesturing     phone and Internet service in                  mand 100 megabits,” Lacouture        nearly immune to rain, which can           ments in materials and tech-                   estimates Louisiana had $24.3 bil-
to mimic the picture breaking up.      many more — 3 million homes.                   said. That’s true, but probably in   cause problems on the phone net-           niques. If it reaches its target of            lion in insured losses, but the state
    “We could get satellite, but our   Verizon doesn’t say how many                   large part due to the lack of home   work.                                      laying fiber by another 3 million              department of insurance says only
only tree in the garden is in the      homes are connected, but analy-                connections at that speed — a            “Customer reports have                 homes by the end of the year,                  $12.5 billion had been paid out as
southwest corner, so we’d have to      sis of a tally by research firm RVA            chicken and egg situation.           dropped by a factor of four or five        that’s a cost of $2.7 billion — about          of the end of April, the last month
chop our only tree down” to get a      LLC indicates that Verizon had                    Speeds may be going up soon,      when we’ve replaced the copper             half of Verizon’s annual earnings.             for which figures were available.

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