Light Reading

FiOS Slows But Still Grows

Alan Breznick
1/21/2014
50%
50%

Despite a more competitive market in the fall and a more cautious approach, Verizon's twin FiOS Video and FiOS Internet services wrapped up 2013 in good form as they continued to make strong inroads against rival cable products.

Verizon Communications Inc. (NYSE: VZ) reported Tuesday that its fiber-fed FiOS platform picked up big bunches of video, broadband, and VoIP subscribers in the fourth quarter. The quarterly gains fell from a year earlier and from the third quarter, but they showed that FiOS is still growing steadily at a time when most large US cable operators are shedding video subscribers and some are losing broadband and VoIP subscribers.

Specifically, Verizon said FiOS netted 92,000 TV subscribers during the fall, versus 134,000 a year earlier and 135,000 over the summer. Even with that lower gain, FiOS Video added 536,000 customers for the year, nearly matching its 2012 pace.

As a result, the telco now has close to 5.3 million TV subscribers, more than all US cable operators except Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC). Further, FiOS Video's penetration rate climbed from 33.3% a year earlier to 35%.

On the broadband side, Verizon said FiOS Internet added 126,000 subscribers, versus 144,000 a year earlier and 173,000 in the third quarter. Even with that less robust addition, FiOS Internet closed out 2013 with 648,000 new subscribers, nearly 7% more than it gained in 2012. Thanks to these gains, Verizon now has almost 6.1 million FiOS Internet subscribers -- more than most US cable operators once again. Moreover, FiOS Internet's penetration rate climbed from 37.3% at the end of 2012 to 39.5%.

"We still took marketshare and increased our penetration," CFO Fran Shammo said during Verizon's earnings call Tuesday morning. The New York metro area, where it competes against Time Warner Cable Inc. (NYSE: TWC) and Cablevision Systems Corp. (NYSE: CVC), remains the fastest-growing FiOS market with the highest penetration rate.

Responding to analyst questions, Shammo conceded that FiOS growth slowed measurably from the third quarter. He blamed the drop on an "extremely competitive environment" and said rivals dropped prices and pitched more aggressive promotions while Verizon "responded cautiously" by staying pat. "We didn't want to chase some of those price points in the fourth quarter. We believed a lot of customers didn't want us intruding in their households during the holiday season."

Though he didn't name names, he was likely referring to TW Cable's aggressive holiday promotions in the fourth quarter. Seeking to make up for high video and broadband losses over the summer, TWC (which competes against Verizon in large swaths of New York and Texas) wooed new subscribers with offers of free tablets from Samsung Electronics Co. Ltd. (Korea: SEC). (See TW Cable Hemorrhages Subs.)

Shammo said Verizon converted 80,000 copper customers to fiber links in the fourth quarter, boosting its 2013 additions to 330,000, or 30,000 above its target for the year. The telco now has fewer than 1 million customers served by copper in its FiOS territories.

In addition, Verizon officials said 46% of FiOS Internet customers now subscribe to the highest Quantum tier, which offers speeds of 50 to 500 Mbit/s. That's up from 41% at the end of the third quarter. Shammo said Verizon will soon introduce a more powerful proprietary router to accelerate home networking speeds for its FiOS customers.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
1/26/2014 | 2:53:02 PM
Re: What's upper limit?
Well, I think it is a bit hard to judge where it will top out.  Let's look at competitive factors:

1 - Sattelite has some significant market share overall about 25%

2 - With FiOS at 35% that leaves cable at 45%.

3 - If we say about 5% of folks are cord cutters or OTA only, maybe cable's real market share is 40%.

I suspect it will be hard to get a larger market share than cable has now.

seven

 
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/26/2014 | 1:44:30 PM
Re: What's upper limit?
Interesting. So I repeat my question, rho. Howv high do you think Verizon can go with FiOS, assuming they really want to? 40% penetration? 45%? 50% or more?  
DanJones
50%
50%
DanJones,
User Rank: Blogger
1/22/2014 | 4:54:48 PM
Re: What's upper limit?
I buy that in Manhattan, less so in the other boroughs...
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
1/22/2014 | 4:48:02 PM
Re: What's upper limit?
Dan,

If you read the comment for detail, you will see that the biggest issue that is reported is building owners who won't let Verizon in their buildings.  It may not be the only issue or the biggest real issue.  I know that Verizon wanted us to build VDSL2 ONTs for buildings for this reason (so they did not have to get new riser access).  That turned out to have its own issues (like say run lots of VDSL2 in a binder group and try to get max throughput from it).  As far as I know, they abandoned that concept post the trial phase.

 

seven

 
DanJones
50%
50%
DanJones,
User Rank: Blogger
1/22/2014 | 2:55:07 PM
Re: What's upper limit?
Hell, FiOS isn't in all of NYC yet...

 

http://gothamist.com/2013/10/11/verizon_fios.php
KBode
100%
0%
KBode,
User Rank: Light Sabre
1/22/2014 | 9:37:12 AM
Re: What's upper limit?
There's still quite a few cities up and down the east coast where Verizon has promised full or broad deployment under their franchise obligations (Philly, DC, NY, Pittsburgh), but lack of interest in low income neighborhoods and ugly wrangling with landlords has held them up. Much of the growth is either there, or in DSL users they want to convert over to the fiber plant.

Outside of that, growth will be limited as these telcos have their eyes squarely fixed on wireless revenues.

You'd think Verizon could nab more cable market share with just some modest movement on price competition. For example their cheapest standalone FiOS plan is upwards of $70 for 15/5 Mbps, and they're actually reducing the number of promotions they're using in NYC.
albreznick
100%
0%
albreznick,
User Rank: Blogger
1/21/2014 | 6:02:50 PM
What's upper limit?
Like AT&T's U-verse, FiOS continues to make inroads against cable, particularly in NYC. But its growth did slow down in the 4th quarter. Is this a sign of things to come or just a fluke? What's the upper limit for its growth? I would've thought it would have topped out by now.
Flash Poll
From The Founder
The New IP is actually bigger even than business. Like another hugely important tech that Light Reading is digging into right now, the New IP has the potential to change the world by fundamentally advancing what it is possible for people to achieve with communications.
LRTV Huawei Video Resource Center
Huawei Shares Its Vision of the Future of Mobile Networks Innovations

2|26|15   |   2:30   |   (0) comments


Mobile broadband is changing our lives. It's reshaping the Internet, industry, and society. It allows us to freely connect with one another anytime, anywhere. At this year's Mobile World Congress, Huawei will share its latest insights and newest ideas and technologies that will shape the future of MBB. They will showcase their end-to-end MBB solutions that will ...
LRTV Huawei Video Resource Center
Accelerate Digitizing, Boost Digital Business

2|26|15   |   6:14   |   (0) comments


A new digital revolution is leading us to a better connected world. Together with millions of digital partners, Huawei will help CSPs to build their digital service ecosystem and aggregate a wide variety of digital services. In this video, we find out how Huawei is going to help CSPs implement digital operations.
LRTV Huawei Video Resource Center
The Secret Recipe to Enabling Hyper-Growth Industries

2|26|15   |   3:38   |   (0) comments


With a number of successful cases on network capability exposure, Huawei is going to share the secret recipe to enabling hyper-growth markets with a step-by-step approach.
LRTV Documentaries
BTE 2015 Is Bigger & Even Better

2|25|15   |   03:13   |   (4) comments


This year's Big Telecom Event (BTE) in Chicago is going to provide more opportunities than ever for networking, getting to grips with key industry challenges and opportunities and, equally as important, having some fun.
LRTV Interviews
Light Reading ICT Leaders Roundtable at MWC 2015

2|12|15   |   1:07   |   (2) comments


On Sunday March 1, 2015, Light Reading will host an ICT Leaders Roundtable in partnership with Huawei. At this half-day event, CIOs, analysts and researchers will discuss key industry trends like virtualization in the cloud with a specific focus on new business models. Located at the luxurious Renaissance Hotel near the Fira Barcelona, space is limited so please ...
LRTV Documentaries
Going Green in 2015

2|12|15   |   02:04   |   (0) comments


Energy efficiency is set to be an incredibly hot topic in the telecom industry this year.
LRTV Custom TV
SDN & NFV: Where Are We Going From Here?

2|11|15   |   11:27   |   (0) comments


Vitesse Semiconductor CTO Martin Nuss gives his perspective on why SDN and NFV should be tightly interconnected and how he sees the industry moving forward.
LRTV Documentaries
Time for Gigabit Europe?

2|9|15   |   01:27   |   (4) comments


Gigabit broadband networks are springing up all around the US and they'll soon become more commonplace in Europe.
LRTV Interviews
Brocade Brings New IP Vision to 2020 Vision Executive Summit

2|3|15   |   4:23   |   (0) comments


In December 2014, Light Reading gathered telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Brocade's Kelly Herrell shared his company's strategy at ...
LRTV Interviews
Brocade's Kelly Herrell on the New IP

2|2|15   |   12:36   |   (0) comments


In December 2014, Steve Saunders sat down with Brocade VP of Software Networking Kelly Herrell at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Brocade's approach to the New IP, the future of the telecom industry, and more.
LRTV Huawei Video Resource Center
Dr. Dong Sun Talks About Carriers' Digital Transformation & Huawei’s Telco OS

1|29|15   |   6:28   |   (0) comments


Dr. Dong Sun, Chief Architect of Digital Transformation Solutions at Huawei, discusses how telecom operators can become digital ecosystem enablers and deliver optimal user experiences that are in real-time, on-demand, all-online, DIY and social (ROADS).
LRTV Huawei Video Resource Center
Huawei's Chief Network Architect Talks about Network Experience & Operators’ Strategies

1|29|15   |   3:39   |   (0) comments


In the digital age, network experience has become the primary productivity especially for telecom operators. In this video, Wenshuan Dang, Huawei’s Chief Network Architect, discusses how carriers can tackle the challenge of infrastructure complexity in order to enhance business agility and improve user experience.
Upcoming Live Events
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
All Upcoming Live Events
Infographics
Net neutrality, broadband services and the current outlook on data consumption, as presented by the New Jersey Institute of Technology.
Hot Topics
10 Weirdly Useful IoT Devices
Eryn Leavens, Copy Desk Editor, 2/24/2015
Small Cells Enabling Location Services
Sarah Thomas, Editorial Operations Director, 2/25/2015
MWC: Let the Madness Begin
Ray Le Maistre, Editor-in-chief, 2/23/2015
FCC Adopts Title II Rules
Alan Breznick, Cable/Video Practice Leader, 2/26/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Check out Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, and Universal, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he had to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.
G'day! And welcome to an entirely new feature on Light Reading -- our weekly "CEO-to-CEO" interview.