Reflecting a broader trend among other US telcos and cable operators, Verizon's Fios business saw a decline in pay-TV subs alongside a rise in broadband customers during a first quarter of 2020 that was partially impacted by the COVID-19 crisis.
Verizon lost 84,000 Fios video customers in the first quarter, widened from a loss of 55,000 subs in the year-ago quarter, ending the period with 4.06 million. Verizon EVP and CFO Matt Ellis said the company expects the pay-TV cord-cutting trend to continue through the year.
Verizon also tacked on 59,000 Fios Internet customers in Q1, up from a gain of 48,000 in the year-ago period. The telco ended the period with 5.96 million Fios Internet customers.
With DSL and other technologies included, Verizon added 31,000 total broadband connections in the quarter, up from adds of 16,000 a year ago. Verizon ended the period with a grand total of 6.48 million broadband connections.
With a loss of 94,000 Fios digital voice connections factored in, Verizon ended Q1 with 13.55 million total Fios digital connections, down 6.2% from the 3.75 million it had in the year-ago period.
Fios revenues were $2.79 billion, up 1.3% from year ago, $2.76 billion
'Fios in a Box' keeps installs going
Though Verizon's video base is eroding from cord-cutting and being impacted by a new "Mix & Match" program that leads with broadband and promotes YouTube TV, overall gross adds of Fios products are being negatively impacted by COVID-19.
Of note, Fios Internet additions were down 60% from March 15 to April 15 due to the virus's impact on business operations, though total results for Fios have been aided by lower levels of churn during the pandemic, the company said.
"To keep our employees and customers safe with social distancing we are generally not performing installations for consumer Fios when working inside the home would be required," Ellis said. "Gross adds are currently limited to those that can be performed directly by the customer or with a technician working outside the home."
Verizon is trying to overcome this obstacle with a new "Fios In a Box" initiative that allows installs to be done without requiring a tech to enter the customer's home.
Verizon's Fios In a Box contains elements such as the optical network terminal (ONT), set-top box, router, a power strip and required coax and Ethernet cables. Verizon is pairing that with "crushable fiber" that can be fed through a window opening. That fiber is endowed with a high enough bend radius to ensure that signals are not degraded when the window is closed on top of the fiber. Verizon technicians also stay nearby to guide customers through the process and help with any installation hiccups using an app.
This video from Verizon shows the Fios In a Box approach in action:
Verizon introduced Fios in a Box within the last two to three weeks, and intends to ramp the program up to help normalize Verizon's ability to install service, company CEO Hans Vestberg said on today's earnings call.
Not everyone is as bullish as Verizon about how well this will work. "How well consumers adjust to self-installation and self-repair is uncertain… but it's not likely to be good," Craig Moffett, analyst with MoffettNathanson said in a note following Verizon's results.
The good news, he said, is that Verizon's video losses, even at a decline rate of 5.8% year-over-year, is still better than the broader industry's rate of decline.
Elsewhere, Verizon Media Group's business, which includes Yahoo, was also hit by COVID-19, with Q1 revenues down 4%, to $1.7 billion. While the unit did see engagement rise across platforms, search revenues were down in the quarter, including a 10% drop in March.
- Verizon opens up about BlueJeans acquisition
- BlueJeans is an awkward fit for Verizon
- Verizon bumps pay for essential, on-site employees
- Verizon, AT&T and others mobilize to fight a virus hitting close to home
- Verizon sweetens new Mix & Match plans
— Jeff Baumgartner, Senior Editor, Light Reading