We estimate full-year 2006 demand by Verizon to be approximately 9 mfkm, about 40 percent of the US market and about 36 percent of the North American total. The factors affecting Verizon's ordering practices are: 1) aggressive targets in the number of homes passed; 2) cost penalties when there isn't cable available in a specific area (Verizon is moving installation crews from state to state); 3) minimising inventory at the year-end. As a result, Verizon ordered aggressively through the summer but began cutting back cable deliveries in Q3. These cutbacks are expected to affect Q4 as well. Verizon has increased its targets for homes passed by FTTH each year: 1 million in 2004, 2 million in 2005, and 3 million in 2006. The run-rate through to 2010 is expected to be around 3 million homes passed per year, keeping Verizon in the N° 1 slot among the world's customers for fibre optic cable.
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