NEW YORK -- Verizon Communications Inc. put a price tag on its ambitious fiber-optic initiative for the first time, estimating yesterday it will spend $22.9 billion to rewire more than half of its copper telephone network so it can sell cable TV and super-fast Internet connections.
The estimate for the ``FiOS" project appeared to be at the lower end of analysts' projections. Verizon expects to offset the cost with $4.9 billion in savings from now until 2010 due to the reduced maintenance needed with a fiber network.
Verizon also issued more bullish subscriber forecasts, predicting the project will generate positive operating income beginning in 2009.
Despite the improved outlook, Verizon stock fell 3.1 percent on the New York Stock Exchange after setting a 52-week high on Tuesday ahead of the update on FiOS .
With cable companies now providing phone service to millions of video subscribers, there is little disagreement that phone companies need to fight back by delivering multimedia capabilities.
However, investors and experts debate whether it makes economic sense to replace the copper lines all the way to every home. In doing so, Verizon will have far more capacity for next-generation services at its disposal than any rival.
By contrast, AT&T Inc. is upgrading its network by installing fiber to the edge of most neighborhoods, then relying on existing copper lines to carry the signal the rest of the way .
The tradeoff between cost and risk is stark: AT&T has put the cost of making U-verse available to 19 million homes by the end of 2008 at about $5.1 billion -- less than a quarter of what Verizon is committing to serve 18 million homes by the end of 2010 .