$4 Billion Cut in Verizon, AT&T Fiber+ DSL Spending

Verizon's wireline capital spending in the first six months of 2010 was $3.35 billion, down nearly $1 billion from last year. For the full year that is nearly a $2 billion drop, which corresponds to their plan to cut the FiOS build in 2010 by 2/3rds. Since they've also cut the post 2010 FiOS build by 2-4 million homes, this is probably a permanent drop. Spread over 4 years, the total cut in Verizon wireline/FiOS spending would be about $7 billion, about the same as the total government money spent on the broadband stimulus.

The numbers at AT&T are similar but not broken out. AT&T cut U-Verse by 1/3rd last year, one reason they went 92K negative on broadband this quarter.

These multi-billion dollar cuts came after the U.S. enacted a stimulus program and now is talking about huge subsidies supposedly for broadband. Verizon CEO Ivan Seidenberg is a smart guy who told investors that he thinks the government will pay up if he doesn't invest. The stimulus, as Tom Hazlett predicted, resulted in fewer new broadband connections as company after company reduced spending hoping the government will pay instead. Verizon is claiming 20-30% of their lines require a subsidy and asking for billions or they might discontinue voice service. Ironically, Verizon and AT&T just reassured Wall Street their wireline margins are staying up.