$B in Corning fiber optic cable implies $4-7B in total cost. Verizon April 21 commitment to the huge fiber buy implies a much larger network build. The actual fiber is almost always less than 30% of the total cost and sometimes < 10%. This should cover more than 100,000 miles of network.
Verizon just spent $1.8B to purchase XO and 20,000 miles of fiber around the country (map on left and larger below.) They have massive amounts of fiber in place in their territory, ~25% of the U.S. They also have extensive fiber to support their nationwide and international long distance network.
This fiber will reduce the annual cost of their 25,000-40,000 wireless towers out of district. It will also give VZ a great deal of leverage with the tower companies. Verizon intends at least some Massive MIMO and mmWave from existing towers, which normally involves an expensive amendment to the lease. With fiber in place, the cost of supporting their own towers will come down, both through negotiations and savings in backhaul. They can credibly threaten to replace purchased services with their own facilities along the fiber route. There's also no reason they couldn't pick up lucrative backhaul contracts from other wireless carriers.
Verizon earns $3B in annual revenues from businesses. XO brings them 4,000 buildings on net. The new fiber will pass 10,000's of thousands more. Business revenue has been falling as cable jumps in to the market. Having more fiber can change that.
Despite those savings, spending that much on new fiber wouldn't make sense unless the 5G mmWave build is on.
Here's the XO map and then the press release with Corning.
Verizon agrees to $1.05 billion three-year minimum purchase agreement with Corning for next-generation optical solutions
NEW YORK – Verizon Communications Inc. (NYSE, Nasdaq: VZ) today announced a three-year minimum purchase agreement with Corning Incorporated (NYSE: GLW) to provide fiber optic cable and associated hardware for Verizon to ensure critical coverage and capacity for its nationwide wireless broadband network.
The agreement calls for Corning to provide and Verizon to purchase up to 20 million kilometers (12.4 million miles) of optical fiber each year from 2018 through 2020, with a minimum purchase commitment of $1.05 billion.
Verizon has been reinventing its network architecture around a next-generation fiber platform that will support all of the company’s businesses. This new architecture is designed to improve Verizon’s 4G LTE coverage, speed the deployment of 5G, and deliver high-speed broadband to homes and businesses of all sizes.
Roger Gurnani, Verizon’s chief information and technology architect, commented, “Corning’s unique combination of capabilities delivers solutions that provide us with performance and cost advantages as we continue to expand our network coverage and capacity.”
In an initial deployment, Verizon launched One Fiber in Boston in 2016 and plans to invest $300 million over six years to deploy it throughout the city.
Viju Menon, Verizon’s chief supply chain officer, said: “Our plans identified a shortfall in fiber supply, and Verizon has been working with business teams to forecast demand and fill supply gaps with existing suppliers. Securing the required volume of optical fiber and hardware solutions with Corning will ensure we meet our planned rollout schedules.”
Clark Kinlin, executive vice president, Corning Incorporated, said: “We are pleased that Verizon recognizes the value of Corning’s innovative solutions in deploying next-generation converged optical infrastructure, such as One Fiber, more quickly and cost effectively. Verizon’s purchase commitment supports necessary capacity investments across our manufacturing footprint.”
Over the past several months, Corning has announced plans to expand capacity and to invest more than $250 million in its optical fiber, cable and solutions manufacturing facilities to help meet the demand of its global carrier and enterprise customers. Corning expects these capacity expansions to begin to come online in 2017 and become fully operational in 2018.