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Why Is Verizon Offering Prepaid Fios?

Mari Silbey
3/6/2017
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Verizon has launched a new effort to extend Fios service into more US households. The telco is introducing a prepaid option that includes access to standalone Internet service as well as bundled offerings of broadband, TV and voice service.

The move is a clear indication by Verizon Communications Inc. (NYSE: VZ) that it wants to get aggressive in improving its penetration rates where Fios is already deployed. As of the end of 2016, Verizon's Fios Internet penetration was 40.4%, but Fios video penetration was down to 34.3% compared to 35.3% the year prior. (See Verizon Feels Cord-Cutting Pinch.)

The prepaid option means Verizon can now court customers that don't have access to credit, and also subscribers who don't want to commit to a long-term contract. There's no credit check, deposit, annual contract, credit card or equipment required to sign up.

The big question is: Does a prepaid option make financial sense for Verizon?


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For $60 per month, prepaid subscribers are promised symmetrical broadband speeds of 25 megabits per second with a free WiFi router included. It's worth noting that Verizon doesn't impose data caps with Fios, so that standalone service also comes with unlimited data usage.

For an additional $40 or $50 per month, subscribers can add on a customized TV package (with one free set-top), and for another $10 monthly fee, Verizon will add voice service to the bundle.

The services aren't cheap, but importantly, neither is customer acquisition for Verizon. In many cases, Verizon still has to pull fiber to a new home even when Fios is already available in a neighborhood. That's a worthwhile investment to gain a long-term subscriber, but if a customer only signs up for a month or two, can Verizon recoup its costs?

Verizon emphasizes that some households will be able to take advantage of a self-install option for prepaid Fios. However, that presumably refers to homes that are already wired with fiber. For new customers that need professional installation, the cost is a one-time fee of $90. Again, that's not cheap, but neither is the cost of a truck roll.

The aggressive push for new subscribers may be Verizon's way of laying the groundwork for its next-generation Fios IPTV service. The more customers the telco can hook now, the more may consider upgrading to the new platform when the next-gen service launches. (See This Is the New Fios TV From Verizon.)

Alternatively, Verizon may simply feel that it needs to market a prepaid service to stay competitive. With the cable industry siphoning away subscribers, and increased pressure from online video providers, the telco needs something new to stand out from the crowd. Until Verizon's IPTV offering goes live, a prepaid service may be the best option available.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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brooks7
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brooks7,
User Rank: Light Sabre
3/8/2017 | 9:50:24 AM
Re: Unlimited or "unlimited"
The reason is the following as far as I can tell you offered:

video conferencing:  I have this today on a much smaller cap

backup:  I have that today on a much smaller cap.

So, if you need that much bandwidth for this stuff then you are doing something way wrong.

Let me give you an example:

Backup - 1 Full backup + Incremental backups of your data (no need to redo your programs).  Alternately, just store your data in the cloud - since that is where your backup is having it on your hard drive with a 500 Mb/s connection offers essentially no benefit.

seven

 
macemoneta
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macemoneta,
User Rank: Lightning
3/7/2017 | 7:02:24 PM
Re: Unlimited or "unlimited"
What's wrong with the two I offered before? 
brooks7
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brooks7,
User Rank: Light Sabre
3/7/2017 | 7:00:33 PM
Re: Unlimited or "unlimited"
I want you to invent a service...for residences that can not be created because of data caps...because there is nothing to prevent you from inventing it.   I have claimed that it doesnt exist.  This isn't a you only application...as bandwidth caps don't exist everywhere...this is one that will be used by 10s of millions of people

 

seven

 
macemoneta
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macemoneta,
User Rank: Lightning
3/7/2017 | 5:12:08 PM
Re: Unlimited or "unlimited"
You want the name of a service that exists, that can't exist because of data caps?

Are you OK?
brooks7
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brooks7,
User Rank: Light Sabre
3/7/2017 | 5:10:20 PM
Re: Unlimited or "unlimited"
"there are services today that can't be offered now because of bandwidth limitations."

 

1 - So you are complaining because of you.  None of what you said requires you to put a server in your house.

2 - You have said nothing that would cost a lot of money if you pushed your data into the cloud - which you claimed to do anyway.

3 - NAME the service....until you do...I declare (as I have for the last 5 years) BS.

 

To repeat none of the things you do require very much bandwidth.  Having your house wired that way is either predicting the far future OR you want to boast.

seven

 
mendyk
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mendyk,
User Rank: Light Sabre
3/7/2017 | 12:07:00 PM
Re: Unlimited or "unlimited"
It seems highly unlikely that the current Justice Department or FCC would be interested in pursuing this type of inquiry. So we may be forced to use our individual BS filters to determine what's real and what's fake when it comes to ads and promises regarding telecom service.
macemoneta
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macemoneta,
User Rank: Lightning
3/7/2017 | 11:59:16 AM
Re: Unlimited or "unlimited"
Usually the Justice Department, the FCC, and the courts (for telecommunications providers).
mendyk
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mendyk,
User Rank: Light Sabre
3/7/2017 | 11:56:43 AM
Re: Unlimited or "unlimited"
Who gets to decide which types of business are oligarchies and which are not?
macemoneta
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macemoneta,
User Rank: Lightning
3/7/2017 | 11:54:04 AM
Re: Unlimited or "unlimited"
When referring to competition, the opposite of limited (as in oligopoly) is not unlimited, it's 'robust'.
mendyk
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mendyk,
User Rank: Light Sabre
3/7/2017 | 11:48:15 AM
Re: Unlimited or "unlimited"
That's a pretty broad starting point. I can't think of a single industry or business sector that has an unlimited set of competitors.
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