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Altice USA, the fourth largest U.S. cable operator, said it plans to convert its entire network into an ultrafast fiber-to-the-home network capable of 10 gigabits-per-second speeds within the next five years, a bold plan that takes aim at the company's fierce rival, Verizon Communications Inc.'s Fios.

With a 1 gbps connection, a customer can download a high-definition movie in about 30 to 40 seconds. A 10 gbps connection would download the movie in just a few seconds. With a 50 megabits-per-second Verizon Fios connection, it would take about 14 minutes.

Altice's announcement marks the most ambitious fiber-to-the-home rollout yet from a major U.S. cable operator. The European telecom group earlier this year closed a deal to buy Cablevision Systems Corp., a longtime New York cable operator, and last year bought Suddenlink Communications, which serves customers in more rural markets. Altice USA has 4.6 million home and business customers in 20 states.

Altice is departing from the approach taken by its industry peers. Other cable operators, including Comcast Corp., have extended high-capacity fiber lines all the way to homes in only select "greenfield" markets and are largely banking on a new cable technology called "DOCSIS 3.1" to deploy gigabit speeds over their existing networks. Traditionally in cable networks, fiber only runs to a central point in local areas, with lower-capacity coaxial cables wired to each home.

Deploying DOCSIS 3.1 avoids the hassle and investment associated with wiring fiber all the way to homes, though operators still need to make substantial investments in back-end infrastructure and deploy new customer modems to reach gigabit speeds. Comcast has already started offering one gigabit-per-second speeds in markets like Atlanta, Nashville and Chicago with that technology. Comcast's 2 gigabits-per-second option, which it offers in several cities, is only for customers who live near its existing fiber backbone, and it requires a special installation to bring fiber to the home.

Altice, however, believes that it doesn't make sense to take intermediate steps. In an interview, Altice Chief Executive Dexter Goei said DOCSIS 3.1 will only get cable so far, but fiber will always be a superior technology and yield faster speeds.

"We know that there will be applications and demand for further bandwidth going forward, whether that is in two, three, four or five years," Mr. Goei said.

He also believes that 5G, a coming wireless standard that AT&T and Verizon have said may rival cable broadband's speeds, will never match the performance of fiber.

Altice plans to start rolling out its fiber deployment next year, with initial markets to be announced in the coming months. Mr. Goei said the rollout shouldn't be disruptive to customers, except that a truck may show up in their neighborhoods to change out the coaxial lines to fiber.

Altice's investment could spell headaches for Fios, which has taken market share from Cablevision since Verizon deployed it nearly a decade ago. Verizon stopped building out its fiber network to new areas in 2010 and of late has refocused its business around wireless and digital content initiatives.

Google recently decided to pull back from its own investments in fiber optic broadband. That doesn't faze Mr. Goei, who noted that Google's initial deployment was from scratch, while Altice will be making more manageable upgrades to an existing network.

He believes that the cost savings Altice is achieving from its austere corporate policies—including by shuttering projects under prior management, like Cablevision's R&D center in California—will be enough to offset the fiber rollout. The company said it doesn't expect a "material" change in its overall capital budget.

Nick Kostov contributed to this article.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com

(END) Dow Jones Newswires

November 30, 2016 10:55 ET (15:55 GMT)

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