Is Verizon's Bet on FiOS Paying Off?

Flip on the TV and you'll have trouble avoiding an ad for FiOS, Verizon Communications' (VZ) super-high-speed fiber-optic Internet and pay TV service. FiOS is Verizon's $23 billion answer to the declining land-line business and cable rivals' "triple play" of television, phone, and online. And FiOS is profitable, according to Chief Executive Officer Ivan G. Seidenberg. "We could easily double the amount of video customers we have on that platform over the next two to three years, and we're getting good margins on it," he said at a Citigroup (C) conference in Phoenix in January.

Now, however, there are reasons to question the notion that FiOS operates in the black. A recent asset sale suggests that FiOS may actually lose money. Moreover, industry analysts infer from Verizon's decision last year to stop pursuing new municipal franchises that all may not be well with the network. The company stands by its CEO's statement.