Verizon Communications announced a three-year minimum purchase agreement with Corning Incorporated valued at $1.05 billion. The deal, announced on April 18, 2017, involves Corning supplying up to 20 million kilometers (12.4 million miles) of optical fiber annually from 2018 through 2020. This fiber and associated hardware are crucial for Verizon to bolster its nationwide wireless broadband network, improve 4G LTE coverage, and accelerate the deployment of 5G.
Verizon identified a shortfall in fiber supply and stated that securing this volume from Corning will ensure they meet planned rollout schedules for their next-generation fiber platform, designed to support all company businesses and deliver high-speed broadband to homes and businesses. Roger Gurnani, Verizon's chief information and technology architect, highlighted Corning's capabilities in providing performance and cost advantages. Viju Menon, Verizon's chief supply chain officer, emphasized the importance of this agreement in filling supply gaps.
To meet the anticipated demand from Verizon and other global customers, Corning had previously announced plans to invest more than $250 million to expand capacity in its optical fiber, cable, and solutions manufacturing facilities. These expansions were expected to become operational in 2017 and fully functional by 2018. Clark Kinlin, Executive Vice President at Corning, noted that Verizon's commitment supports these necessary capacity investments.
Verizon's fiber expansion efforts include its One Fiber initiative, launched in Boston in 2016, with a planned investment of $300 million over six years to deploy it throughout the city, replacing legacy copper infrastructure. This agreement also comes after Verizon's $1.8 billion acquisition of XO Communications in February, which expanded its fiber footprint into 45 of the 50 largest U.S. cities, positioning the company to strengthen its presence in the fiber-based networking space and prepare for 5G fixed wireless services, which it began testing in 11 U.S. markets for a potential 2018 commercial launch.
