Verizon Hits Hurdles in Big Bet On New High-Speed Network

[SOURCE: Wall Street Journal, AUTHOR: Dionne Searcey dionne.searcey@wsj.com]
Two years ago, Verizon Communications Chief Executive Ivan Seidenberg made a colossal gamble. He put Verizon on course to spend billions of dollars on a new network of fiber-optic cable that would carry television, Internet and voice directly into homes across the country. The goal: dominate the new race among phone, cable and Web companies to supply those digital services bundled into one package. Now Mr. Seidenberg's plans are running into some hurdles. Beset by the challenges of digging up lawns and wooing local officials, Verizon landed 44 approvals last year to offer television service, slightly more than half the company's target for the year, according to people familiar with the situation. To save time and money, Verizon has scaled back its "fiber to the home" plan to something more modest that doesn't necessarily put fiber in people's living rooms. AT&T's planned $67 billion acquisition of BellSouth Corp., which would make it far bigger than Verizon, is adding new pressure. AT&T is also rolling out Internet and television services but it's using a cheaper method that would bring fiber only as far as neighborhoods. That has freed up resources for AT&T to make three acquisitions to compete better against Verizon in wireless, Internet and business services, as well as powerful cable rivals. While Verizon has made a big acquisition of its own recently -- MCI -- it has largely been focusing on its costly network upgrades. Investors have been noticing the difference. Verizon shares are down nearly 17% since the beginning of 2005, despite a recent rally. AT&T shares rose 13% between the beginning of 2005 and the BellSouth announcement, and BellSouth's stock rose nearly 14% during that period.
http://online.wsj.com/article/SB114178362044392106.html?mod=todays_us_page_one
(requires subscription)