Verizon’s FiOS expansion is still as dead as Francisco Franco.

Verizon is prepared to watch up to 30% of their copper landline customers drift away because the company is adamant about no further expansion of its FiOS fiber to the home network.

Fran Shammo, chief financial officer at Verizon, told attendees of the Jefferies Global Technology, Media & Telecom Conference that Verizon will complete the buildout of its fiber network to a total of about 19 million homes, and that is it.

“Look, we will continue to fulfill our FiOS license franchise agreements,” Frammo said. “[We will] cover about 70% of our legacy footprint. So 30%, we are not going to cover. That is where we are still going to have copper.”

That is bad news for Verizon customers stuck with the company’s copper network because Verizon isn’t planning any further significant investments in it.

“We will continue to harvest that copper network and those customers and keep them as long as we can,” Frammo said. “But we will not be building FiOS out for those areas.”

In fact, Frammo admitted ongoing cost-cutting at Verizon’s landline division is allowing the company to shift more money and resources to its more profitable wireless network.

Verizon CEO Lowell McAdam doesn’t want to spend money on non-FiOS areas when more can be made from its wireless network.

“It is also taking cost structure out,” Frammo said.  “As I mentioned, the migration of copper to fiber has been very big for us. Our Lean Six Sigma projects have really significantly helped us in our capital investment in the wireline which is why I can put more money into the wireless side of the business.”

Verizon has shifted an increasing proportion of its capital investments towards its wireless division year after year, while cutting ongoing investment in wireline. Ratepayers are not benefiting from this arrangement, and critics contend Verizon landline customers are effectively subsidizing Verizon’s wireless networks.

Verizon will still complete the FiOS buildouts it committed to earlier, particularly in New York City, but it is increasingly unlikely Verizon will ever start another wave of fiber upgrades.

In fact, Michael McCormack, the Jefferies’ Wall Street analyst questioning Shammo at the conference foreshadowed what is more likely to happen to Verizon’s legacy copper customers.

“We have talked extensively in the past about the non-FiOS areas and I guess in my second reincarnation as a banker, I will try to help you get rid of those assets,” said McCormack.

This week, mobile customers in Bahrain can now sign up for uncongested, ultra-fast 4G LTE broadband packages that include 120GB of usage and a free LTE router or MiFi device, all priced less than what AT&T and Verizon Wireless charge for just 1GB of mobile broadband and the cost of the device to use it.

Zain Bahrain began offering mobile broadband packages this week that start at under $32 a month. For video lovers and downloaders, the company charges $53 a month for up to 120GB of usage at speeds up to 25Mbps, equipment included at no extra charge. Customers upgrading to 250GB or 1000GB usage allowances also get much faster performance on the company’s LTE network — up to 100Mbps.

Customers that exceed those usage allowances are not billed overlimit fees. Their speeds are temporarily throttled to a still-usable 2-4Mbps, depending on the chosen plan. There is a 4GB daily usage limit.

In the United States, AT&T customers pay $50 a month for a DataConnect plan offering up to 5GB of usage, with a $10/GB overlimit fee. A smartphone customer pays a combined $65 a month for a 1GB plan and device fee.

A Verizon Wireless customer pays $50 as month for a shared data plan offering a 4GB data allowance and includes the monthly device fee. A smartphone customer pays $80 a month ($70 if on Verizon’s Edge plan) for a 1GB plan and device fee.

“We are delighted that we are leveraging the investment in our new network to benefit our customers with new offers,” said Zain Bahrain’s enterprise broadband products and services manager Mohammed Al Alawi. “Today’s broadband customers are bandwidth hungry, with diverse connectivity needs; our new 4G LTE broadband packages are custom-designed to meet these needs and enable a digital lifestyle like never before.”

[flv]http://www.phillipdampier.com/video/Why should you switch to 4G LTE with Zain 2014.mp4[/flv]

Zain produced this English language video to introduce its 4G LTE service offering speeds up to 100Mbps in Kuwait. Unlike in the United States, generous usage allowances from Zain make wireless broadband a prospect for Internet users in the home and on the go. (2:20)

AT&T and Verizon Wireless are thrilled customers are moving away from subsidized smartphones, because both are raking in extra revenue they are not returning to customers with lower plan prices.

In the past, customers have usually chosen discounted new phones that come with a two-year contract. A smartphone that retails for $650 sells in the store for $199 or less, with the $450 subsidy gradually repaid through artificially high service plan prices over the length of the contract. The subsidy system didn’t hurt long-term revenues because the money was eventually recovered and contracts locked most customers into place for at least two years. But Wall Street has never been thrilled by carriers tying up subsidy money on the books for two years.

For a transition away from the subsidy system to be fair, providers need to lower plan prices enough to drop the subsidy payback. But neither AT&T or Verizon Wireless have done that.

AT&T customers choosing an $650 iPhone on contract under the subsidy system will pay $200 up front, a $36 activation fee, and $80 a month for a two-year plan with 2GB of data. Total cost: $2,156.

If you buy your own iPhone and finance it through AT&T, which most customers are likely to do, the cost is $65 a month for the service plan, no activation fee, and a device installment payment plan of $32.50 a month for 20 months. Total cost: $2,210 or $54 more than the subsidized plan costs.

Verizon Wireless is a bigger taker.

Sign a two-year contract with Big Red for that same phone and 2GB plan and you will pay $200 up front, an activation fee of $35, and $75 a month for the service. That adds up to $2,035. Buying a no-contract iPhone without a subsidy costs $27 a month for the installment plan, no activation fee, and $65 a month for the service. That totals $2,210, $175 more than a subsidy customer pays.

Big spending-customers can realize some further savings by upgrading to plans with a bigger data allowance, but those plans won’t make sense if you don’t use up your allowance.

Both companies claim the unsubsidized plans save customers money, but they actually don’t for most because neither lowered plan rates enough and are now pocketing the difference. Verizon and AT&T also argue customers don’t have to pay several hundred dollars up front for a phone, which is true, but they will pay more for it over time. It is also true these unsubsidized plans allow for earlier upgrades, but customers are paying for that privilege.

It’s hard to say whether AT&T and Verizon Wireless will pay fair value for old phones as customers choose to upgrade. If they don’t, customers could effectively hand both companies even more money through undervalued trade-ins.

At least 40 percent of AT&T customers are choosing the unsubsidized route through AT&T Next and the company couldn’t be more pleased.

In a conference call with investors this week, AT&T’s chief financial officer told analysts wireless service margins were up to 45.4%, with AT&T Next having a positive impact on that margin.

John Stephens noted that with the retail price of smartphones being in the $600-650 range, more customers are being convinced to sign up for AT&T’s handset insurance plan, which provides AT&T with two benefits. First, the insurance earns AT&T more than it pays out in claims and second, devices returned under the insurance program are refurbished and then sent to other AT&T customers filing claims in the future.

Tim K. Horan from Oppenheimer & Co., Inc. believes AT&T’s total subsidy expenses/internal costs are around $400 for a subsidized phone but only $100 for a phone sold on the Next unsubsidized installment plan.

With competition from T-Mobile starting to have an impact on both companies, AT&T and Verizon Wireless have plenty of room to further lower their rates and still come out ahead.

The New Jersey Board of Public Utilities today voted unanimously to approve a Verizon-friendly settlement that lets the phone company off the hook for its 1993 commitment to offer broadband service to every resident in the state who wants it.

Critics call the decision a “total capitulation” by state regulators that proved “very amenable to Verizon’s agenda.”

Verizon will now be allowed to substitute its costly, usage-capped, high-speed 4G LTE wireless service in rural areas instead of expanding DSL or its fiber optic network FiOS.

Verizon won deregulation two decades ago in an agreement known as “Opportunity New Jersey” in return for a commitment to expand high speed Internet access to all of New Jersey by 2010 — a deadline long missed. Critics charge Verizon collected as much as $15 billion in unregulated service revenue it would have otherwise never received, yet stopped its fiber optic rollout more than two years ago.

A number of rural New Jersey communities including Hopewell, Alloway and Pilesgrove townships opposed Verizon’s settlement proposal because it would let the company walk away from its earlier commitments and leave parts of southern New Jersey without any broadband service. Now those communities may eventually be served by Verizon Wireless, but at a significant cost starting at $50 a month for up to just 4GB of broadband usage.

Verizon gets to keep its current deregulation framework in place as part of the settlement.

The New Jersey Board of Public Utilities consists of five commissioners all appointed by the governor and confirmed by the state Senate for six year, staggered terms. Gov. Chris Christie’s appointees now dominate the BPU, and critics charge he uses the regulatory agency as a political patronage dumping ground. Earlier this year, he faced criticism for appointing the wife of a longtime Christie ally to lead the board. Dianne Solomon served on Christie’s transition team and brought a very thin resume to the position — serving as a paralegal and an umpire certified by the United States Tennis Association.