The Times this morning posted "A Bear Speaks" on its Bits blog, based on one analyst's contrarian view of the wisdom of our FiOS investment.

Based on our four years of experience deploying and selling FiOS, I thought I'd offer our own observation about the bear's view:

It's near-sighted.

Verizon's investment in FiOS was a strategic decision looked at from several perspectives.  The Times' bear seems focused only on the short-term economics of the investment.  Fair enough.  But even at that, some of his underlying assumptions are wrong.

The facts are that our return on FiOS will exceed our cost of capital.  When looking at the economics of the investment, we see significant financial benefits from maintenance expense savings, and we track three metrics we consider critical:

1.  Capital costs

–          We said our target per home passed was $700 by 2010, and we are ahead of plan to achieve that objective. In fact, we’ve already beaten the target.

–          We said our target per home connected was $650 by 2010, and we’re on plan to hit that target.

2.  Penetration

      --    We said Internet penetration would be 35-40 percent by 2010 and we are on track to achieve that objective with a current penetration of 24 percent.

      --    We said TV penetration would be 20-25 percent by 2010 and we already are at 20 percent so are now saying we will exceed 25 percent.

3. ARPU (average revenue per customer per month)

      --    Our average revenue per subscriber is more than $130/mos and better than plan.  For those with the triple play (a bundle that includes FiOS voice, Internet and TV) it is even higher.

Still, any analysis of today's economics gives only a partial view of the real value of FiOS to Verizon, our customers and our investors.

When we looked at FiOS, we looked not only at what was financially prudent today, but also where communications and entertainment technology was headed tomorrow -- and 10 years from now.  We looked at how customer demands would change and grow.  We even considered how regulators and policymakers might come to value the great potential of broadband to provide an economic stimulus to the U.S. economy, and perhaps even some solutions to our health care and environmental concerns.

In the near future, we see the benefits of having a converged set of products and services.  We see new services that will drive additional revenues.  For example, in our view, FiOS Internet is a natural replacement for outdated cable-modem technology, with fiber capacities better suited to handling streaming media and the burgeoning, bandwidth-intense applications being developed for everything from social networking, to gaming and entertainment, to work-at-home, education and health care.  We also see wireless as a more feature-rich replacement to cable-based telephone services.

Our fiber network will create new uses.  We didn't build it to provide plain old cable TV service.  Instead, it's our view that customers will increasingly demand the types of wireless and fiber broadband services that are just now beginning to emerge.

UPDATE: It seems the comments to Bear’s thoughts take issue with his myopic viewpoint as well.  One begins this way: “What about the value Verizon is going to get from applications not yet invented?”  A question we look forward to having FiOS help answer.