moffett researchJust a few weeks after building a case for why cable companies will dominate the broadband market,  Moffett Research today noted some exceptions to that prediction. Cable companies that compete with Verizon’s FiOS offering will face “competition for market share” that will be “perennially more intense” than in other markets, wrote Moffett researchers in a research note issued today.

Moffett has long questioned the value of the investment that Verizon made in FiOS. But in the new research based in part on data from the licensing bureau of the U.S. Copyright Office, Moffett is a bit more positive than in the past about FiOS’s prospects.

Moffett’s latest analysis suggests that “FiOS will sustain subscriber growth longer than either we or Verizon had projected, and that FiOS will ultimately achieve higher penetration rates than either we or Verizon had originally targeted,” researchers wrote.

Even in some of its oldest markets, where Verizon has been marketing FiOS for seven years, FiOS still saw growth rates of 6.4% on 2012, wrote Moffett.

Because FiOS uses fiber-to-the-home it is better positioned to compete against the cable companies than offerings based on legacy copper or fiber-to-the-node, Moffett researchers argue.

“Verizon’s FiOS is overwhelmingly the largest and most important FTTH network in the U.S.,” the researchers wrote. “For comparison, Verizon’s FiOS covers 14% of American homes; Google’s fledgling fiber network, at least based on the three markets that have been disclosed up to now . . . will cover less than ½% to 1% when it is eventually completed.”

FiOS strengths won’t make much difference to cable companies like Charter and Cox that do not operate in many FiOS markets, Moffett predicts. Charter overlaps with FiOS in just 4% of its territory, and for Cox the overlap is 9%.

FiOS may be more of a concern for the nation’s two largest cable companies – Time Warner Cable and Comcast – which have overlap with FiOS of 14% and 19%, respectively. But the company with the most at stake, according to Moffett, is Cablevision, which overlaps with FiOS in 64% of its serving area.

Despite FiOS’s newly identified strengths, however, Moffett hasn’t changed its rather negative view toward Verizon.

“Perversely FiOS is far more important to the companies with which Verizon competes than it is to Verizon itself,” researchers wrote. They make this argument because “ultimately it will be wireless rather than wireline that is determinative of outcomes for Verizon investors” and “while Verizon’s is the best performing wireless business in the U.S. by far, it is also the most overvalued.”