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FiOS Turns the Screw on Cable

Mari Silbey
4/22/2013
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U.S. cable operators take note: Verizon Communications Inc. announced gains for its FiOS broadband and video services offerings as part of its strong first-quarter results. That's noteworthy because while the cable sector suffered attrition of its video customer base during 2012, Verizon's FiOS gains have come not only from building new fiber access infrastructure in more U.S. markets but also by gaining customers in existing markets: That means Verizon is continuing to increase penetration in neighborhoods where its fiber access network is already deployed. Verizon isn't the only company pressuring the cable operators: AT&T Inc. also grew its video customer base in 2012. (See Good News/Bad News for Cable TV.) Verizon's first-quarter numbers show steady gains: Internet service penetration jumped from 37.3 percent in the fourth quarter of 2012 to 38.2 percent in the first quarter of 2013, while video service penetration jumped from 33.3 percent to 34.1 percent. Verizon gained 188,000 FiOS broadband customers, taking its total to 5.6 million, and added 166,000 video service subscribers, taking that total to 4.9 million. (See Verizon Operating Revenue Up 4.2% in 1Q13.) Now that the operator's new fiber deployments have slowed -- see FTTH Quietly Grows 10% in North America -- Verizon has to rely on improving penetration rates to increase revenues and that new focus appears to be working. Not only have FiOS revenues grown 15.1 percent year over year, but Verizon says its average monthly revenue per user for FiOS stayed above $150 during the first quarter. AT&T and Time Warner Cable Inc. will both report their first-quarter earnings later this week, while Comcast Corp., Charter Communications Inc. and Cablevision Systems Corp. will follow in early May. — Mari Silbey, Special to Light Reading Cable

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brookseven
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brookseven,
User Rank: Light Sabre
4/29/2013 | 1:52:31 PM
re: FiOS Turns the Screw on Cable
mmqos,

Sorry for the delay in the response, I was travelling. Verizon in 03 was run by the wireline guys. Its now run by the wireless guys. See the problem?

Also, nobody is overbuilding each other as an incumbent. Comcast is not overbuilding Charter or Cox. See the thing?

And yes, wireless is taking over the voice world. My guess would be that 25 years from now few if any folks get a land line.

seven
soldack
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soldack,
User Rank: Light Beer
4/28/2013 | 12:33:12 PM
re: FiOS Turns the Screw on Cable
In the philly subburbs, VZ and Comcast trade 1 year specials. They are about the same price once the specials are done. Comcast will do more to keep you a customer while VZ will let you walk away rather than get aggressive to keep you. They have a disloyalty program it seems. The quality is good though. I dumped both and just use comcast for cable, and hulu, netflix, and amazon, and over the air for TV and magic jack for a home phone.
MMQoS
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MMQoS,
User Rank: Light Sabre
4/23/2013 | 10:06:41 PM
re: FiOS Turns the Screw on Cable
Seven:
Yes I understand all about the biz side of Vz but as Bob Dylan sang, the times they are a'changin' including a LOT of management and policy changes at Vz since 2003.-á
You wrote-
"The reason you don't get FiOS is that AT&T is your incumbent wireline carrier for residential service."

Yes that is the old incumbent SP paradyme but one that has been changing with cable (Comcast) now being successful offering triple play services given their (Comcast's) higher speed I'net connections at very competitive prices.-á Xlnt marketing too.-á att seems to be conceding their wireline biz as well here, with marketing focus on cellular and providing existing wireline customers declining service. -á
MMQoS
brookseven
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brookseven,
User Rank: Light Sabre
4/23/2013 | 3:28:46 PM
re: FiOS Turns the Screw on Cable
The reason you don't get FiOS is that AT&T is your incumbent wireline carrier for residential service. -áThe fiber you talk about is business/transport not residential. -áVerizon stated in 2003 (and shown no plans to alter this) that they are not planning to put in FiOS where they are not the incumbent LEC. -áIn fact, they sold some properties over time particularly more rural ones to Fairpoint and Frontier.

As to West Coast, they absolutely deployed FiOS in Orange County where they are the ILEC. -áThey deployed faster there than anywhere else...even Keller.

seven
MMQoS
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MMQoS,
User Rank: Light Sabre
4/23/2013 | 6:28:33 AM
re: FiOS Turns the Screw on Cable
Brook:
Don't understand yr comment: "Are you somewhere in rural CA? Or a VzW sub in an AT&T property?"-á No, I'm in the heart of Silicon Valley where Vz Wireline is not the incumbent even though they have a large fiber footprint via Brooks Fiber/MCI/WC, now Vz Business.-á You seem to be mixing VzW with Vz Wireline.-á As far as I know Verizon has not deployed FiOS anywhere on our west coast even though they have vocal customers asking for high speed from their acquisition of GTE.
Even Google with their ftth program don't want to offer 21st century fiber connections to our hi tech area even though the Yahoo CEO lives 3 blocks away.-á Even with VzW LTE (and I helped with that at Nortel) it is no substitute for the b/w potential of ftth and I helped develop the FiOS Multiscreen service.
My only option other than reverse is to go to my local Vz Wireless store and ask to sign up for Comcast TV because in our area, the Dish and Direct birds are so close to the horizon that my "tall trees" interfere with the signal.
MMQoS
brookseven
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brookseven,
User Rank: Light Sabre
4/23/2013 | 1:30:27 AM
re: FiOS Turns the Screw on Cable
mmqos,

You are in a Verizon property in CA without FiOS? -áHmmm....as I recall the OC was some of the fastest and largest deployments. -áAre you somewhere in rural CA? Or a VzW sub in an AT&T property?

As to Frontier, please note that Verizon upgraded equipment continuously pre-sale of properties. -áFrontier not so much. -áThe ex-VzW FiOS was a very small part of the Frontier purchase (mostly in Oregon if my memory is working properly) and Frontier did not have other indigenous video properties outside of Elk Grove.

seven
MMQoS
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MMQoS,
User Rank: Light Sabre
4/23/2013 | 12:32:08 AM
re: FiOS Turns the Screw on Cable
My question for you LR investigative people to investigate, is when do McAdam and Shamano wake up and realize that FiOS is a money maker and maybe more importantly a way to keep their existing wireline customers?-á The other question I have is when FiOS returns 100% of the profits to the company while Wireless has to be shared with Vodaphone why all of the huge emphasis on VzW?-á-á
Verizon has customers out here in California who are crying for FiOS.-á att is losing internet-á connections to Comcast because Comcast is offering higher speed and has better marketing.-á Verizon, with access via all of the MCI/Worldcom fiber they acquired out here, and some positive work with local jurisdictions, could come in and blow both of them away.
Guess as a stockholder, I'll have to find a way to address the next qtrly meeting via video.

And to sjaynes970's comment about premise equipment, having fancy HD DVR equipment is not working out here for att especially as their TV signal is not true High Definition.-á Verizon could bring in any of several DVR options and that situation could be remedied in a heart beat.-á
MMQoS
craigleddy
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craigleddy,
User Rank: Blogger
4/22/2013 | 8:38:34 PM
re: FiOS Turns the Screw on Cable
Since many cable companies continue to post declines in cable TV subscriptions quarter after quarter, they might think anything on the positive side is a jump!
sjaynes970
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sjaynes970,
User Rank: Light Beer
4/22/2013 | 6:22:05 PM
re: FiOS Turns the Screw on Cable
In our market, Frontier Communications purchased the business from Verizon. -áThe-ápremises equipment for FIOS is sadly lacking compared to Cable or Satellite, especially the HD DVR equipment. -á

Sadly, Frontier has no public plans for improvement, so many of their customers are being shuffled to Dish Network as an alternative in their bundled offerings. -áDish Network is not a workable solution for everyone, due to unworkable lines-of-site for many subscribers. -áPersonally, I was fortunate in that DirecTV's satellite field-of-view -áwas sufficiently different than Dish Network's that I could use them as a provider. -áMy new "un-bundled" packages are competitive with the Frontier FIOS + Dish Network bundle, but that's a lost revenue stream for Frontier.

From what I read while formulating my new strategy for pay-TV for the next two years, I believe my story is not uncommon in Frontier's markets.

The good is Frontiers Internet connectivity via FIOS is unparalleled. -áThe Bad is they seem to be abandoning the TV part of their offering.

If Verizon is to continue the win new customer base, in the era of ever increasing use of HD content and equipment, they must maintain or exceed parity with the other service providers' on-premises equipment offerings i.e. Genie and Hopper.
msilbey
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msilbey,
User Rank: Blogger
4/22/2013 | 5:58:22 PM
re: FiOS Turns the Screw on Cable
Mendyk- I actually hesitated over using the word "jumps" but decided in the time span of a single quarter it was valid.-á

As for penetration, Verizon describes it as actual subscribers as a percentage of potential subscribers.-á
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