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Verizon: Is a High-End Broadband Upgrade in the Cards?

Verizon Communications Inc. VZ is finally set to upgrade its high-end broadband technology. In December last year, Verizon had conducted a request for proposal (RFP) for the planned upgrade. The company has reportedly close in on its choice of a vendor for the same.

The largest wireless operator in the U.S. by subscriber count, Verizon still relies on the Gigabit Passive Optical Network (GPON) technology for its high-end fixed broadband service delivery. It has been looking to shift to the next-gen PON (NG-PON2) technology for quite some time now. However, the size and worth of the RFP has been kept under wraps.

Benefits of a New Technology

The new NG-PON2 technology will allow Verizon to deliver symmetrical 10-GB broadband on each of the four wavelengths delivered over a single fiber, with the option of increasing capacity further in the future. Moreover, the upgrade will not require Verizon to replace the existing fiber, thereby saving capital expenditures. However, Verizon needs to replace its optical line and optical network terminals for which the RFP was executed. The possible contenders for the RFP are Nokia Corp. NOK-owned Alcatel-Lucent, ADTRAN, Inc. ADTN and Cisco Systems Inc. CSCO.  

The NG-PON2-enabled networks will be introduced to the business services market initially, with a gradual spread to residential markets such as online video streaming and Internet of Things (IoT) applications. Moreover, Verizon can offer video streaming services in 4K resolution, which will help gain traction in a market that is dominated by Netflix Inc. and Hulu.com.

The Bottom Line

While much of the focus lies on Verizon’s wireless operations, higher wireline capacity supports wireless access upgrades. Verizon recently acquired XO Communications to boost its fiber presence. With the company gearing itself up for 5G trials, we believe, going ahead, recent investments in wireline assets will supplement growth of its wireless capabilities as well.

Verizon Communications currently carries a Zacks Rank #3 (Hold).

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CISCO SYSTEMS (CSCO): Free Stock Analysis Report
 
ADTRAN INC (ADTN): Free Stock Analysis Report
 
NOKIA CP-ADR A (NOK): Free Stock Analysis Report
 
VERIZON COMM (VZ): Free Stock Analysis Report
 
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