John Malone, the co-owner of DirecTV (NasdaqGS: DTV) and chairman of Liberty Global who was outbid by Cablevision (NYSE: CVC) to acquire Bresnan Communications, is throwing water on Verizon`s (NYSE:VZ) FiOS Fiber to the Home (FTTH) and TV fire.
Perhaps bruising from his loss to Cablevision, Malone, during recent Liberty Global meeting, said that "returns on FiOS are atrociously bad."
He believes what`s flawed about both Verizon and its counterpart AT&T`s U-Verse TV and Fiber to the Node strategy is that they are both overbuilding in areas where cable already offers television services. "I`ve never seen overbuilds work ... it always ends up badly," he said.
Well, it`s hard to say that FiOS has been a complete failure as Malone suggests. While it will be decades before Verizon brings FTTH to every household, the telco has made steady progress with FiOS, planning to make it available to 18 million homes by the end of 2010. In Q1 2010, Verizon added 185,000 net new FiOS Internet customers and 168,000 net new FiOS TV customers.
Despite the progress it has made, Verizon is being realistic about its FiOS investment strategy. Earlier this year, the service provider announced that it would focus on expanding FiOS only to existing communities and other areas where it has made a commitment to bring the service. And to make the service more attractive to potential cable and satellite defectors, Verizon just yesterday eliminated long-term FiOS contracts.
