Verizon’s Big Broadband Bet

Verizon placed a big bet at a Las Vegas trade show — $3 billion. That’s how much the New York company and its wireless affiliate will spend to bring broadband to the masses over the next two years.

Verizon Wireless officials said the compny will expand its third-generation mobile broadband network, which delivers high-speed multi-media content. Unlike Wi-Fi , users don’t have to be within a few hundred feet for the service.

Meanwhile, Verizon will accelerate the upgrade of its wireline operations to Voice over Internet protocol technology using softswitches and gateways from Nortel .

It is also moving forward with plans to roll out fiber-to-the-home (FTTH), which it says will reach 1 million homes by year’s end. Other telecoms including fellow Baby Bell SBC are taking a wait-and-see approach to FTTH because regulatory issues about line-sharing with smaller competitors have not yet been settled.

“We believe we are on the brink of an exciting new era of communications,” Verizon CEO Ivan Seidenberg at the Consumer Electronics Show today.

The move is not without risk. The telecom is gambling that the economic turnaround is for real; that consumers and businesses are ready to use or pay for new services; and that it will leap ahead of competitors instead of getting bogged down by the challenges of a new venture.

The company could hedge by reallocating funds, however as the “industry and economy move forward, we’re more than happy to add capital expenditure,” Seidenberg said.

In addition to fortifying networks to deliver voice, video and data at high speeds, Verizon is rolling out a new product and service this year for residential and small business customers.

Dubbed Verizon One, the service is a “digital command center” for home users. The unit combines a touch screen, cordless phone and wireless digital subscriber line router.

Verizon’s iobi (pronounced eye-oh-bee) service is designed to help businesses and consumers manage their communications. For example, a voice message from a landline or cell phone can be received as an e-mail or text message on a PDA or laptop, or redirected to a different phone line.

Pricing for the product or service has not been set; the company has not chosen a vendor for the components involved in the Verizon One products and services. Verizon officials said they are close to finalizing contracts for the network expansion.

Recent orders from Verizon and other sector deals have raised hope that orders for routers and other equipment that directs network traffic. For example, earlier today, Nortel said it signed a three-year deal to sell and support Avici carrier-class core routers as part of its converged IP network technology offerings.

The pact “points to increasing capacity needs in the core of the network, an area that had been plagued by overcapacity for several years,” Christin Armacost, an analyst with SG Cowen wrote in a research note to investors.

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