To say that Verizon will be spending $300 million to install fiber-optic cable in the city of Boston misses the bigger point.
Over six years, Verizon will replace its copper wire with fiber optic cable for Internet and, potentially, cable TV service to homes and businesses. But there's a lot more to the deal announced with Boston on Tuesday.
Verizon and the city will get a fiber "platform," the two parties said, which is another way of saying that there will be many other uses for the new fiber optic cable.
First, Verizon and the city have agreed that fiber will serve as a backhaul to small cellular devices atop lighting and utility poles to boost 4G LTE wireless capability and coverage where needed. The two parties have entered into an agreement where Verizon will pay $50,000 a year for the city's administration cost of issuing construction permits. In addition, Verizon will pay for the permits to run fiber strands up many of the utility poles in the city.
City of Boston CIO Jascha Franklin-Hodge said in an interview that the fiber cable will run from a pole with the wireless equipment to a utility box, where the fiber will connect to the rest of the network.
City permits will be issued to run fiber, which will boost Internet speeds, to homes and businesses, the downtown area and in many schools and other public buildings. The city has agreed to issue the permits in batches to expedite the construction process, officials said. Expediting city permits for cable and cell towers has been a major concern of telecommunications carriers nationally.
Second, Verizon will use the fiber platform to test its 5G wireless innovations, which could come to life by 2022 with faster wireless speeds running at a higher frequency. Verizon has an innovation center in nearby Waltham, where much of that work is already happening.
Third, Verizon and Boston will work on a pilot smart city project that could provide the most interesting technology of all. The project will focus on improving safety and traffic congestion along busy Massachusetts Avenue, in a segment called the "Vision Zero Priority Corridor."
Vision Zero is an idea stemming from a network of cities that have set a goal of eliminating fatalities and serious injuries resulting from crashes involving motor vehicles, bicycles and pedestrians, Franklin-Hodge said. In Boston's case, the timetable to reach that goal is 2030.
The project with Verizon includes experimenting with sensors and advanced traffic signal control technology to measure bike traffic, improve public traffic flow and decrease congestion.
"I don't think we know yet what technology we're including in the pilot and that's why it's a pilot," Franklin-Hodge said. "Are there changes to signal timing? Are there ways to measure cyclists to improve safety? If we make a section of the corridor safer, does it increase its use? Another piece is if we prioritize the use of transit and find a way to put a bus through an intersection 30 seconds faster, even if that's at the expense of single occupant cars, that could be an incredible benefit."
In contrast to some other cities, such as Atlanta, Franklin-Hodge said the pilot along Massachusetts Avenue won't focus on installing video surveillance technology.
"In some parts of Boston, people have asked for more video surveillance for public safety and traffic, but there's a balance between privacy and public safety," he said.
In addition to the Massachusetts Avenue project, Verizon officials said the city may choose Verizon's Thingspace app development platform to centralize management of the city's apps for 311 information, parking meters and others in the future. Thingspace, which was launched last year, allows organizations to create and manage Internet of Things applications.
Fourth, Verizon's introduction of fiber optic cable in the city will bring the potential for innovations not realized today. The uses of fiber in terms of data throughput and speed are practically "infinite, as the electronics gets more sophisticated," Franklin-Hodge said. He noted that 10 years ago, 10Gbps speeds over fiber were touted, "but now are at a terabit per second."
With fiber, data travels over light waves. Part of what gives a fiber optic cable so much capacity is that many different colors of light can be used to carry the data.
"Just by the sheer laws of physics, fiber has a far longer useful life than copper, and we've already hit the limit on DSL," he said.
From Verizon's viewpoint, converting copper to fiber is "much cheaper to run and maintain, and on a bandwidth-available basis, there is no comparison," said Jack Gold, an analyst at J. Gold Associates.
Google Fiber, AT&T and many others have seen the benefits and have launched fast Internet services over fiber in other cities. Some analysts said that Verizon is somewhat late to the game, at least in Boston, even though it has installed its Fios service in many locations around the country, but not in most of Boston.
Part of what drove Verizon to the fiber deal with Boston is a nationwide race by Internet service providers to find cities that want to work with them closely.
"Verizon has to compete with the aggressive AT&T and Comcast initiatives," Gold said. "Verizon really wants you to be able to buy all of your services in one basket — wireless, Fios, and add-on services like burglar, fire and security monitoring."
With the deal in Boston, Gold also said that Verizon clearly wants to position itself as a "ready-made outlet" for its media content after its purchase of AOL and the reports that it may acquire Yahoo. Verizon is also applying to be a cable TV franchise for Boston using its fiber.
Verizon has been dinged in the past for not equipping Boston with Fios earlier, but having the broader "platform" of capabilities that were announced has pushed Verizon into doing so.
"The financial analysis with Fios alone in Boston is not something that makes sense for Verizon as a business," said Donna Cupelo, New England region president for Verizon, in an interview. "That was true for Boston in 2004 and 2009 and 2014, but now we have a different approach for the overall needs of customers to make a financially solid decision based on all those factors."
Beyond what Verizon has posted online, it isn't completely clear how fast or how costly the fiber service will be in Boston. One portion of the company's website says upload and download speeds with Fios (primarily for residential customers) will be "up to 500 Mbps" but another portion for business customers says speed choices will be "up to 10 Gigabit Ethernet."
Fios for Internet service only is listed on a separate Verizon site at $69.99 per month for speeds of 150 Mbps, although there are other tiers of Internet-only service, as well as packages of Internet and cable TV, or Internet, cable TV and phone.
Franklin-Hodge said that the biggest advantage of Fios's arrival in Boston may be the ability to offer a competitive alternative to Comcast, which has about 90% of the residential market, while another provide, RCN, has about 10%. With more competition, businesses outside the central business district may see the biggest benefits in lowered Internet service costs, he said.
"I can't think of any unregulated industry in which a single provider has created a positive result for consumers," Franklin-Hodge said. "We're trying to increase competition with the goal of affordability."
Verizon has divided the construction project into four parts of the city over six years and earliest work could start in early summer based on the priorities determined after citizens vote on Verizon's online poll, Cupelo said.
"I love Boston and have worked here all my years," she said. "It is a great city with great people, and Verizon's extraordinary employees are excited about a partnership with a government that cares about the same things we do, with an opportunity for innovation."