Verizon Corporation was formed in 2000 when Bell Atlantic bought GTE, since that time, Verizon has become the top U.S. telecom services provider for two years running. Its three major divisions have each made substantial gains and profits in the past five years and continue to show tremendous growth. Their three divisions are Telecom, Business, and Wireless. Its telecom operations include over 45 million access lines through 28 different states and Washington D.C. Verizon Wireless is a joint partnership with the Vodafone Group that has over 60 million customers nationwide and is second only to the newly formed at&T Mobility (formerly known as Cingular). Verizon Business was formed in the past year when Verizon bought out the declining MCI to create a globally advanced communications and information technology “powerhouse” that services large businesses and institutional clients. All three of these divisions have prospered primarily because at&T has dedicated itself to the development of new technology that has allowed it to show positive revenue and profit gains over the past six years and continues to fuel its growth. The following analysis will look at the specific technology that Verizon has implemented which has reflected in its revenue and client growth.
Verizon has committed itself to finding strong technology solutions to improve its business operations and create greater revenue. Within its Telecommunications unit, Verizon has made significant improvements upon its infrastructure through technology solutions. Verizon gained a strong user base through their broadband services because it provided fast and efficient service through their Fios connections. Fios, a new fiber network developed by Verizon will outclass current fiber networks by carrying not only telephony services but also television and high speed data transfer. This service is a vast improvement upon traditional fiber-optic mediums and will eventually displace the majority of current fiber-optic networks. Fios is called a “gigabit passive optical network” or G-PON. This technology increases the aggregate broadband speeds of Verizon’s FTTP system by four times its current downstream speed and eight times its current upstream speed. This network will fully enable Verizon to provide enhancements to Fios internet services and Fios TV. As the first company to deploy such technology in the United States, Verizon faces several challenges, but the implementation of this technology will be crucial to the future success of Verizon as it will have a significant competitive advantage compared to at&T and other telecommunications companies.
The Fios fiber network has already been integrated in the vast majority of Verizon’s network, however it has seen its cost per household soar substantially due to the fact that Fios connections needs to be made to each house individually. Here again, Verizon proved its technology innovation. In 2006, Verizon implemented new technology via the MoCA (Multimedia over Coax Alliance). MoCA will allow Verizon to reduce the cost of Fios installation by using existing cabling via coaxial cable to connect home computers to its broadband network. Previous to these efforts, Verizon spent about 1200 dollars per home to connect customers to their fiber network as well as an additional 1400 dollars per home Verizon had to spend to stall the fiber network to telephone poles around neighborhoods. As a result of their technology advantage in leverage coaxial connections, Verizon has been able to slash the costs of installing Fios substantially. The cost for installation per home has decreased to 715 per home, and the cost for laying new fiber in neighborhoods to 890 per home. The innovation within their telecommunications division reflects two levels of innovation that is emblematic of Verizon’s overall strategy. Verizon has developed its Fios network is the future infrastructure of fiber connectivity in the United States, thus setting the stage for it to become the optimum future provider of high speed data transfers. Secondly, it continues to implement that technology that increases the efficiency, organization and cost effectiveness of its business practices. Fios and MoCa are two reasons that Verizon has successfully used technology implementation to affect the bottom line of the company. Over the past two years, Verizon has increased its subscription of Fios services by 32% and continues to show exceptional growth in 2007. Despite the fact that their investment will not show a healthy return until years in the future, Verizon has established the infrastructure with their technology to substantially out compete other telecommunication companies such as at&T with their fiber network. As a result, Fios services include not only telephony but also broadband, TV and data transfer services that will substantially increase Verizon profits in the future.
Verizon telecommunications is not the only division that uses technology as its driver for success; Verizon’s wireless division has also maintained a competitive advantage in technology that has shown dividends. In 2004, Verizon switched over to Evolution-Data Optimized third generation wide area network. This technology allows users to have mobile broadband access at speeds previously unheard of in the mobile technology field with up to 300-500 kilobits per second. The 3G network has tremendous technology benefits as the fastest commercial wide-area wireless data technology that is available today. This technology which was originally developed by Qualcomm will give Verizon an advantage not only in wireless service provision but also data transfer. The vision of Verizon in this technology leap is astounding since it already was sitting as the number one provider of mobile services with the top rated clarity and network strength in the nation. The implementation of 3G technologies shows once again that Verizon is fully dedicated to being ahead of its competition in technology implementation and development. Its use of backward compatibility in the implementation of BroadbandAccess using the EV-DO device has seamlessly switched Verizon users from their NationalAccess network to the new platform, ensuring no customer inconvenience. Again, Verizon shows through this technology implementation and development reveals that not only does Verizon focus on providing top tier technology but it works to ensure efficiency and service in its technology implementation and integration. This has translated to increased revenue as well as user subscription for Verizon in the past two years. Verizon Wireless grew at an average of 15% over the past two years and continues to show strong growth. This growth can be directly attributed to the quality and technology advantage that Verizon possesses.
The implementation of technology described above will pay its dividends for Verizon in the next five years. When the Fios network has been fully integrated into the national infrastructure, Verizon will no longer have to pay the development and implementation costs, while subscription services will increase as Fios takes over as the predominant network used for telephony, broadband and television services. The distance between Verizon and its telecommunication competition should widen substantially. In addition, Verizon wireless will continue to enjoy its competitive advantage in the wireless sector. Despite the current status of at&T mobility as the number mobile carrier, Verizon should eclipse them because of their stronger network and superior communication technology.
Verizon Communications. 20 Oct. 2006 http://ptg.djnr.com/ccroot/asp/cqu/cqu_results.asp
Verizon Communications Inc. 14 Oct. 2006 http://www.hoovers.com/co/news
Verizon Wireless Reports Solid Third Quarter Customer Growth. 4 Oct. 2006. 10 Oct. 2006. http://investor.verizon.com/news/VZ/
Verizon Wireless Announces Roll Out of National 3G Network.” VZN News. 27 Mar. 2007 http://news.vzw.com/lead_story/pr2004-01-08.html.
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