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Paying a bundle for cable upgrade

Verizon set to spend $200m to make FiOS services available to 500,000 Mass. homes in '08

Email|Print| Text size + By Carolyn Y. Johnson
Globe Staff / February 29, 2008

Verizon Communications Inc. yesterday disclosed a $200 million capital investment plan to expand its television service and high-speed Internet offerings in Massachusetts this year.

Verizon will apply to offer fiber-optic, or FiOS TV, service to 30 more communities in Eastern Massachusetts. The company will also build DSL Internet offerings in 23 communities in Western Massachusetts and double Internet speeds for two dozen communities, mainly in Central Massachusetts. As part of the expansion, the company is also creating 200 customer service jobs in Massachusetts.

"By the end of the year, we expect FiOS services to be available to half a million households in nearly 100 Massachusetts communities," said Donna Cupelo, Verizon's regional president for Massachusetts and Rhode Island.

Last year, in the midst of a legislative battle to ease the rules surrounding cable franchising, Verizon said it would not apply for new licenses to offer FiOS TV services until it finished open projects. The company has won approval in nearly all of the communities where it had applied for licenses. It now offers FiOS TV in 63 communities, and according to a filing with the state, Verizon had more than 78,000 cable TV customers through the end of last year, passing RCN Corp. to become the state's second-largest cable provider behind Comcast Corp., which has about 1.6 million customers in 238 communities.

"This is an $18 billion investment from Verizon to lay the fiber infrastructure for FiOS data and FiOS TV, so spending a few extra hundred million in a potentially profitable market is a small percentage on top of what they've already spent," said James McQuivey, analyst at Forrester Research. "They've got some experience and know what kind of uptake they are going to get, and probably have some very reliable models that say they can make some money over the next five to 10 years."

But the company did not say when it would offer TV service in Boston, where it began installing fiber more than a year ago. Cupelo said Verizon was learning to overcome challenges in densely populated urban areas as it worked in communities like Lynn, Framingham, Lawrence, and Malden.

The disclosure also comes in the midst of the Patrick administration's push to expand broadband access to unserved and underserved communities through a proposed $25 million broadband incentive fund. Cupelo said the company would hope to work closely with the state as the broadband initiative moves forward.

But for now the new DSL service in Western Massachusetts will be available to about 70 percent of households in 23 towns, and service will be available in about a year.

Legislators from Western Massachusetts praised Verizon's decision to expand services, which would provide high-speed Internet to two-thirds of the 32 towns identified by the state as lacking high-speed Internet access.

"The Internet is basically the highway of the 21st century, and you can't build an economy without the ability to access the highway," said state Senator Stan Rosenberg.

Don Dubendorf, chairman of Berkshire Connect, an organization that has been working to bring broadband to Western Massachusetts, said he was surprised but pleased by the plan.

"We have an extraordinary problem in Western Massachusetts. We have communities with even nothing but second-rate phone service," Dubendorf said. "To the extent we can get people investing in telecom infrastructure in ways they haven't ever before - that's great news."

Carolyn Y. Johnson can be reached at cjohnson@globe.com.

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