Harold Naparst

<b>Re: Comment on FiOS Broadband Pricing</b><br><br><b>Re: Comment on FiOS Broadband Pricing</b><br><br>You draw an interesting parallel to Global Crossing – the key difference between Verizon's FiOS and GLBC is that a) Verizon isn't necessarily building out excess capacity to the extent that GLBC did previously, and b) Verizon is primarily providing broadband service to individual and enterprise customers while GLBC's core business in 2001-2002 was providing IP backbone/transit services to other telecoms and leasing out "dark fiber", which is essentially unused capacity (not to mention the controversial capacity swap transactions). As Verizon has largely built out FiOS in metropolitan areas, and only provides Fiber to the Home (FTTH) to customers who order it, we do not foresee Verizon encountering the issues that pushed Global Crossing into bankruptcy. While GLBC was essentially offering a commodity service, in the case of FiOS there is a fixed limit to supply, particularly given the lack of competition. Because broadband providers require a franchise agreement with municipalities, customers can usually only access high-speed broadband services from 1-3 operators - the incumbent cable operator, Verizon/AT&T and potentially a cable overbuilder such as RCN. As speeds – and demand for higher speeds – continue to increase, and competition remains relatively stifled by the franchise model, we don't expect pricing on premium services such as FTTH to take a serious hit (though pricing for DSL and other slower services will certainly decline sharply).