Verizon (NYSE: VZ) is quietly battling the decline in Ethernet cable orders with an Ethernet program dubbed "Titan" -- an initiative it hasn't yet formally announced -- as more wholesale and retail customers turn to cable competitors.

Targeting customer locations where Verizon has fiber available, the Titan program provisions service level agreements (SLAs) and what Verizon says is "aggressively reduced pricing for Ethernet" services.

Verizon mentioned Titan in a March 1 FCC ex parte filing, but the service provider has not yet publicized the business services program.

Though most of the details in the filing were redacted for confidentiality, Verizon said that "Titan has been generally well-received by customers, and we are analyzing the business case for" similar programs.

Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) have continued to gain more share in the Ethernet market, by expanding their fiber network and offering more services over their hybrid fiber coax (HFC) networks. Other cable operators are also delivering Ethernet to retail and wholesale customers leveraging a mix of fiber and existing HFC facilities.

Meantime, Verizon said it continues to lose ground in the Ethernet market as more of its business services customers turn to cable operators for similar services.

"As cable succeeds in the marketplace, Verizon is seeing order volumes drop for Ethernet services. Over the last three months, order volumes for Ethernet are down … over the previous three months," Verizon said in the filing. "Year-over-year for that same three-month period, Ethernet orders decreased by [redacted]…, and almost without exception, customers are sending us fewer Ethernet orders than they were this time last year. And those customers are telling Verizon that trend will continue and worsen as they send more business to cable."

Adjusting the pricing regime is just one part of Verizon's plan to address cable's Ethernet threat. The service provider is also looking at other service options like its wholesale "Fiber to the Internet" service to give those customers another Internet access option.

Unlike the near-ubiquitous nature of cable HFC network, Verizon's ability to deliver services like Fiber to the Internet is limited to how many buildings it has on its network. However, the service provider will bolster its on-net footprint when it completes its acquisition of XO Communications' fiber network next year -- a deal which will give the service provider an additional 4,000 on-net buildings.

"Verizon is limited, however, to offering that service at business locations where we have fiber facilities that support broadband Internet access," Verizon said. "… we are also looking at other product development options to respond to cable's broadband and Ethernet over HFC offerings."

Interestingly, Verizon noted that some customers are willing to forgo a fiber-based offering like Fiber to the Internet, instead purchasing an Ethernet over HFC service from cable.

"Increasingly, in fact, Verizon's wholesale and retail customers are choosing cable's Ethernet over HFC or broadband Internet access service instead of legacy TDM-based special access and instead of the more robust Ethernet over Fiber services Verizon and others offer," Verizon said.

One of Verizon's wholesale customers said "it will purchase any of those services from cable as long as minimum performance criteria are met," adding that it will "send its future orders for service at 100Mbps or higher to cable."

Verizon's filing comes as the FCC completes its investigation of how it should regulate the special access market. The telco has maintained that cable's move to take away more DS1 and Ethernet customers from ILECs shows that cable is a major competitive presence, and it has grown in strength and size since the Commission collected 2013 data," adding that because of "these and other facts, there is no basis on which to increase regulation of ILEC business broadband services, including legacy special access and Ethernet."

For more:

- see this FCC filing (PDF)

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