Verizon to Raise Prices, Cut Jobs

Did you actually believe cable competition would benefit consumers by adding jobs and lowering prices? Verizon Communications Inc. (NYSE: VZ) CFO Doreen Toben set us straight today by telling analysts that the company will once again be raising prices on FiOS in the second quarter of this year.

“We anticipate raising prices for strategic products again in the second quarter,” said Toben during Verizon’s first quarter earnings conference call this morning. Toben was alluding to last year when Verizon made similar price increases to FiOS.

Toben did not say exactly where or by how much FiOS would become more expensive but suggested it could be with “set top boxes, premium channels, or miscellaneous.” Verizon however will keep its introductory triple play offer price of $99, saying that the price is being set by the market. Verizon’s average revenue per user (ARPU) on FiOS currently sits at $129 -- a number Toben says is much higher for triple play packages.

But despite Verizon’s continued success with FiOS uptake and its demonstrated ability to increase average revenue per user (ARPU) with the service, its wireline growth continues to sag while wireless continues to pick up the slack. (See Wireless Fuels Verizon's Q1.)

The company has already eliminated nearly 10,000 jobs within certain wireline services and Toben announced that “ongoing reductions are planned throughout this year.” (See You're Fired and Landline Landslide Will Lead to More Layoffs.) Verizon lost 726,000 residential access lines during the first quarter.

Several analysts during the call expressed concern over Verizon’s declining wireline margins. But COO Denny Strigl waved off the concerns saying that “first quarter margins are typically lower than third and fourth quarter” and that this current quarter was nothing out of the ordinary.

Meanwhile with FiOS continuing to catch on in the markets where it is available, Verizon says it expects the service to be EBITDA positive by the end of this year. FiOS, which is costing Verizon $23 billion overall to install, has been diluting earnings ever since the company began rolling it out. But the trend is starting to reverse itself.

“At this point FiOS is not really diluting on a sequential basis. We expect it to be positive by the end of the year,” said Toben. — Raymond McConville, Reporter, Light Reading

rjs 12/5/2012 | 3:42:16 PM
re: Verizon to Raise Prices, Cut Jobs To quote Forest Gump's Mama ....
"Monopoly is Monopoly does!"

Yup, all you wise policy makers, learn from Forest Gump.

thebulk 12/5/2012 | 3:42:15 PM
re: Verizon to Raise Prices, Cut Jobs Cmon the FCC will never figure that out.... dont give them to much credit.....

besides verison will pay off FIOS with all of its ongoing law suits agains MSO's
Kreskin 12/5/2012 | 3:42:15 PM
re: Verizon to Raise Prices, Cut Jobs
Also, what analysts are not asking ... how many TDM lines are you losing to yourself (FIOS)? And, how many customer lines are served by a digital port (VOIP)?

The government and analysts still want to measure by lines ... in the world of fiber to the premis - it is all about ports & bandwidth ... not lines.

I give Wall Street 5 more years to figure it out, the FCC at least 10 ...
OldPOTS 12/5/2012 | 3:42:14 PM
re: Verizon to Raise Prices, Cut Jobs I put on my Buba Gump hat and read the article closely and inferred that the installation costs are hurting them, especially if customers only take one service vs triple play. Old Telco installation practices RJS?

In my neighborhood most subs are taking only the Internet service and installation looks like Larry, Harry and Moe.

busted 12/5/2012 | 3:42:10 PM
re: Verizon to Raise Prices, Cut Jobs free TV with Fios service
thebulk 12/5/2012 | 3:42:09 PM
re: Verizon to Raise Prices, Cut Jobs
i spoke with someone just the other day who actually has the TV in question and was saying its junk. his has not worked since he got it and verizon is not willing to do anything about it.
Raymond McConville 12/5/2012 | 3:42:09 PM
re: Verizon to Raise Prices, Cut Jobs I think people actually overestimate the effect the free TV giveaway had on margins. I'm not sure of the exact model of TV they were giving away other than the fact that it was a Sharp brand. But I'd be willing to bet it was an older model that Sharp was looking to phase out, had a lot of old stock they needed to move, and dumped them off to Verizon for next to nothing. Plus as we later found out, Verizon made people jump through hoops to get the TV and when they were bored with that, they set the hoops on fire.
Raymond McConville 12/5/2012 | 3:42:09 PM
re: Verizon to Raise Prices, Cut Jobs holy crap, there was a Harry Stooge??
busted 12/5/2012 | 3:42:08 PM
re: Verizon to Raise Prices, Cut Jobs Moe, Larry, Curley, Shemp, Curley Joe, who else?

bollocks187 12/5/2012 | 3:42:05 PM
re: Verizon to Raise Prices, Cut Jobs All this FIos is garbage. The reasons the cost are so high has a lot to do with the compnay selecting GPON in the first place. The technocratis and the Beurocrats at Verizon need to be put out to pasture they contiue to design inefecinet networks.

GPON is Junk. They have not learnt their lesson from the BPON experience.

They continue to beat up the vendors with ridiculous price points the only ones left to serve them now are the really big vendors who are now hurting themselves.

They continue to place lawsuits on the competitors to stop them from growing.

They continue to make stupid claims about the groth and expected returns from fios (Fools Internet, Outdated Service) - other acryn. welcome.

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