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Recession slows expensive Verizon FiOS expansion

Verizon Communications is winding down its expensive deployment of fiber-optic cable. That means if the telco hasn’t already started wiring an area with its FiOS fiber-optic TV and broadband service, chances are it won’t happen.

Outside of satellite services, FiOS has been the only competition for cable TV. In areas where it is deployed, cable prices have fallen.

However, Verizon is nearing the end of its program to replace copper phone lines with optical fiber that provide much higher Internet speeds and TV service. The company’s focus is now on completing the network in the communities where it’s already secured franchises to sell TV service.

Verizon will continue to pull fiber to homes in New York City, Washington, D.C., and Philadelphia — projects that will take years to complete. However, Boston and Baltimore will probably not get the service.

Verizon is still negotiating for franchises in some smaller communities, mainly in New York, Massachusetts and Pennsylvania, but it is not working on securing franchises for any other major urban areas. For example, the company said it has halted negotiations for the Washington suburb of Alexandria, VA.

Verizon never committed to bringing FiOS to its entire local phone service area. The telco has introduced FiOS in 16 states, but the deployment is concentrated on the East Coast, and Verizon is selling off most of its service areas in the Midwest and on the West Coast. Its stated goal was to make FiOS available to 18 million households by the end of 2010, and it’s on track to reach or exceed that.

That will still leave a third of its service area (excluding the territories it is selling) without fiber. Verizon hinted in 2008 that it might continue expansion of FiOS beyond this year, but the recession has slowed that possibility.

Verizon CEO Ivan Seidenberg told investors in January that FiOS itself has been doing well, but Verizon’s sales of services to large businesses have suffered in the downturn, and it needed to offset that by not being too ’’aggressive’’ in marketing FiOS.

Verizon doesn’t appear to have ruled out further FiOS expansion, but doesn’t have any plans, either. At the end of last year, Verizon had 2.86 million FiOS TV subscribers and 3.43 million FiOS Internet subscribers.