Light Reading
Verizon's fiber-fed platform registers slower but steady growth in Q4, ending 2013 on a high note despite broadband price wars.

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
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Using Service Quality to Drive WiFi Monetization

10|22|14   |   6:51   |   (0) comments


Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Analysts Warn of Major NFV Gaps
Carol Wilson, Editor-at-large, 10/22/2014
Is Health the Killer App for the IoT?
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/22/2014
Drones Hover Over the IoT Sector
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/23/2014
The Human Gain of the Smart Home
Robin Mersh, 10/20/2014
Zayo Zooms Out of the IPO Gate
Dan O'Shea, Managing Editor, 10/17/2014
Like Us on Facebook
Twitter Feed