A very interesting competitive development is taking place in the Dallas, TX suburbs. Verizon is apparently preparing to overbuild AT&T U-verse territory with Verizon FiOS service. This is a first, at least that I’m aware of, where large incumbent “baby bells” enter each other’s territory with competing landline services. Apparently, the rules have changed, and dramatically so. Verizon appears to be taking advantage of statewide video franchising rules (as Texas provides), and acting as a cable overbuilder, as opposed to a traditional telecom CLEC. The development was reported in this OneTrack post. I guess the gloves are slowly coming off.
This strategy does go counter to conventional wisdom. Verizon is entering the market as the third triple play provider, competing with well established brands (not to mention the DBS competition). Most business consultants would advise against such a move. What does Verizon have up their sleeve? Do they feel that strongly about FiOS and its competitive advantage/differentiation? Perhaps. It will be an interesting test case to observe. If Verizon has some success with this overbuild strategy, will we see it in more territories where Verizon is geographically positioned against AT&T and Qwest? Verizon’s purchase of GTE several years ago gives them multiple territories in multiple states that are closely aligned with incumbent AT&T and Qwest territories. Qwest would seem to be more vulnerable, since they have no triple play network of their own. Of course, if Verizon aggressively moves on an overbuild strategy, AT&T certainly won’t sit back and wait – they may decide to strike first. I recognize this is just speculation, seeing as the first household in AT&T territory has yet to be lit with FiOS. But this is definitely a development to keep a close eye on. We may be witnessing the first salvo of an historic competitive battle.
