Verizon's fiber-optic 'FiOS' network is a major upgrade for consumers over the telco's old, copper-based network. But Bernstein analyst Craig Moffett continues to bang on his drum: It's a lousy project for Verizon (VZ) investors, he says, that will effectively burn $6 billion.

In a report summarized by the New York Times, Moffett argues that even if Verizon got to 40% market share in the areas it serves, it'd still be losing money over a 15-year period:

...The operating profit, in present value terms, that Verizon will earn from FiOS customers will be $2,520 for those that buy video and phone service, 3,068 for Internet and phone service, and 3,334 for customers that buy the so-called triple play. None of those are above the $3,897 per-customer cost of building the network.

The bottom line, after assuming how many customers will buy each type of service, is that Verizon will lose $769 on each FiOS customer, according to Mr. Moffett's vast spreadsheet.

Hardly ideal. But in Verizon's defense, does it have many options -- besides going out of business? None, says Moffett -- they're screwed, period.

Mr. Moffett starts with the premise that the 130-year-old phone network based on copper wire will become extinct.

'It is an obsolete technology,' he said. 'It's not like horses lost share of the transportation market until they stabilized at 40 percent market share.'

...To be sure, Mr. Moffett says that FiOS is not a 'bet the company' move by Verizon. Because the company has a vibrant wireless business, it has the money to absorb the cost of building FiOS and the inevitable decline of the rest of its wireline network, Mr. Moffett said.

...Qwest, which doesn't have a cellphone business to fund any capital expenditures, is the only phone company that has come up with what Mr. Moffett defines as the right answer: do nothing.

'Qwest decided there is no return to any of this stuff, so let's run the business for cash,' he said.

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