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Cable/Video

Verizon Dresses Up DSL

Forget free Flip cameras or gift cards. Verizon Communications Inc. (NYSE: VZ) has launched a new DSL pricing strategy, hoping to lure its remaining dialup Internet customers into broadband by lowering prices and eliminating contract requirements. (See Verizon Cuts DSL Prices, Contracts.)

For $40, consumers who order service online can now get unlimited local and toll calls (that means short-distance long-distance calls) along with 1Mbit/s High Speed Internet (HSI) and, if they choose, add a DirecTV video package at a discount. Unlimited long-distance adds $10.

That's about as low as Verizon can go and still maintain its margins, says Rick Yorra, manager of consumer core strategy. The new strategy will replace promotions such as free Flips or notebook computers -- those proved "difficult to manage," he says. Consumers who don't order online will pay $5 more as Verizon continues to push its self-service strategy.

Through focus groups and other market research, Verizon determined that consumers wanted value without contracts -- thus the new pricing, Yorra says. Consumers wanted an option to avoid buying more expensive long-distance service as well.

For $15 more a month, consumers can add the fastest broadband speed Verizon can provide at their location, which could be as much as 15Mbit/s for those lucky enough to live close to a central office. Those two pricing tiers -- 1Mbit/s or fastest available -- are the only two remaining.

Why this matters
Verizon is best known for its FiOS services, but almost 11 million of its 26 million households don't have fiber-to-the-home and, as that construction program winds down, won't be getting it. Verizon has launched this strategy to boost its appeal to those customers and get the stubborn dialup crowd to submit to broadband.

For more
Here's a look at some of Verizon's other moves on the consumer front:

&mdash Carol Wilson, Chief Editor, Events, Light Reading

paolo.franzoi 12/5/2012 | 5:07:15 PM
re: Verizon Dresses Up DSL

Wonder if the naked dsl variants will work with Vonage.


Then you would have $30 data and voice with unlimited calling.


I mean I do get the point for these low rate DSL offerings...cheaper than cable for those who performance matters less.


seven


 

paolo.franzoi 12/5/2012 | 5:07:15 PM
re: Verizon Dresses Up DSL

 


So, if phone service is $25 that means that DSL is now $15 with the benefit of free long distance.  I assume they will convert these folks and then maybe sell the rest of the dial-up biz?  Cuz $40 is still more than $40 so it still costs more/month than a dial-up line that does not call long distance (which is basically anyone with a cell phone).


seven


 

cnwedit 12/5/2012 | 5:07:15 PM
re: Verizon Dresses Up DSL

I think it's interesting that they are conceding the LD market to cellphones and trying to produce a bundle that the budget-conscious might buy to get better voice quality for local calls.


I personally find it hard to relate to anyone who's still on dial-up, so it's hard to imagine if something like this succeeds.

cnwedit 12/5/2012 | 5:07:15 PM
re: Verizon Dresses Up DSL

Actually, I made a mistake - the cost is $34.99 for those who order on line and buy HSI at speeds up to 1 Meg (for basic browsing, email, etc). The voice service includes unlimited local and toll, which is intraLATA LD. Actual unlimited LD is $10 more.


Verizon says they did research and focus groups and that this is what consumers want. They want to get out from under contracts, and they want the service as cheap as they can get it.


Under the same program, a naked DSL line will cost $14.99 for up to 1 Meg, and $24.99 for the fastest available to a given home. I'm pretty sure AT&T is already offering $15 a month naked DSL, at least here in the Chicago area.


I'm not sure this gets DSL lines on the uptick again, which they haven't been, but I would say it makes more sense than constantly running promotional deals and trying to lure customers with gimmicks.


 

cnwedit 12/5/2012 | 5:07:14 PM
re: Verizon Dresses Up DSL

I suspect the biggest barrier to a wireless MDU service would be customer support -they don't want to answer the phone when it doesn't work, for whatever reason.


It is interesting to consider what innovation at the bottom of the market might look like, since so much focus is placed at the top.

paolo.franzoi 12/5/2012 | 5:07:14 PM
re: Verizon Dresses Up DSL

 


I hadn't really thought about it, but are these plans available for existing DSL subs?  Wondering if there are occasional users that might lower their bills and this actually lowering DSL revenue.


I think that they are going after the lowest of the low end.  I always thought that a DSL offering that included a VoIP phone + a single stream for Switched Digital video for a very modest price would be a good offering to take over the basic cable business.  I would not think it would be sexy in terms of margin or ARPU but long term cash flow would be excellent.  Have a DSL modem with 3 jacks on the back and an integrated WiFi port.  Self-install.  Self-provisioned.  Maybe even set it up so that you could offer Netflix.


The other half of my brain wonders if there is not some wireless low end service that could cover this portion of the market (especially for apartments).  That way people could take their coverage as they move apartments and such as plug 'n play.


Again, not sexy but easy on the wallet - low investment and long term cash flow (maybe Paypal/Credit Card for payment?).


 


seven


 

fgoldstein 12/5/2012 | 5:07:11 PM
re: Verizon Dresses Up DSL

If ti's unlimited intraLATA toll only, then it's probably set up that way because they don't want the state ILEC subsidiary to go through the accounting needed to do interLATA, which would be purchased from a separate subsidiary, Verizon Business. They have very complex shenanigans already going on between subsidiaries, showing massive losses at the state ILECs yet massive "wireline" profits at the corporate rollup (SEC report) level.  They pin the costs to the state subs and apparently impute the revenues to the unregulated subs.


There are still many places where they don't offer DSL, even around here where big parts of Metro Boston are out of DSL range (too far from the CO), but passed by FiOS.  They recently lied in a regulatory proceeding I'm aware of and said that they have never, ever installed remote field-mounted DSLAMs.  In fact they've done it a bunch of times, mostly in Pennsylvania, but it's not their standard practice the way it was with say BellSouth.


 

Duh! 12/5/2012 | 5:07:07 PM
re: Verizon Dresses Up DSL

"They recently lied in a regulatory proceeding I'm aware of and said that they have never, ever installed remote field-mounted DSLAMs.  In fact they've done it a bunch of times, mostly in Pennsylvania, but it's not their standard practice the way it was with say BellSouth."


Fred,


"Lied" is kind of a strong word... more likely, one hand not knowing what the other is doing.   A common occurance at VZ.  Particularly if the equipment in question predates the Nynex acquisition.  Probably nobody involved in the filing had a clue that the stuff existed.



You do raise an interesting question.  The plan (at least as of a few years ago) was to try to abandon copper plant as soon as possible after FiOS was deployed.  In fact, part of the business case for FiOS was reduced maintenance cost after the copper was wrecked out.  So - and this isn't clear from the article - are they promoting DSL in areas also served by FiOS?  Or is there some fine print to the effect that the offer does not apply to FiOS served areas?


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