Verizon Officially Announces FiOS Quantum > Is VZ really committed to FiOS?

Is VZ really committed to FiOS?

I figure they're doing two things:

1) They're looking for the "premium" customer, or one who buys based more on features and less on price. This is the same dynamic with DirecTV versus DISH Network. DirecTV prices itself higher and, in return, has to deal less with customers who do things like don't pay on time. Verizon, I imagine has decided to stop competing on price and instead say "our stuff is AWESOME and those who know better will fork out for it." As long as FiOS has rock-solid reliability and sustained speeds, a (potentially) profitable minority will pay the extra bucks.

2) They've decided to really go after recouping the costs of the build-out. I mean, pedal-to-the-floor, paid-off-by-2016 fast. Shoveling more bits faster has a minimal incremental cost to a wired company, so if this can help them claim the need for higher rates, why not go for it? Verizon-the-landline company has been a break-even proposition at best for the past few years because of all the money they've spent on FiOS.

Plus, remember that the rates quoted above are outside of a regular bundle agreement, which Verizon really wants customers to take. Extreme HD + 50/20 is quoted at $104.99 for me, which is only $5 more than Time Warner Cable in the same market, with TWC offering half the transfer rate and fewer channels.

There's only one problem out there. How many premium customers are there really? I think in the age of biennial rate increases, there's far more people looking to penny-pinch, question what services they need, and whether they need any of them all (cutting the "cord", going all wireless).

If Verizon is going to ignore these people, then they're going to struggle to find new customers and keep old ones.

Yes, DirecTV has a premium product. But they also send me a promo every week for $29.95/month service. If you want Sunday Ticket, Extra Innings, that's there for you. But they're still trying to compete, and be all things to all people. While you can question their commitment to mainstream HD channels (the same way you can with FiOS), DirecTV is not just saying "We're better, pay for it". A request that simple would easily fall on deaf ears.

DirecTV does offer cheap rates, but now they're only to two types of customers: Existing customers who are off contract, and new customers who pass a credit check. That $29.95 is usually only good for 6 or 12 months, but you've just agreed to a 24 month contract; that's where DirecTV gets sneaky.

To answer your other question, I guess Verizon thinks there are enough premium customers in its footprint to make the gamble worthwhile. My uneducated guess is that they're probably right, or that this is how they'll position themselves for people who do TV cord cutting ("run 12 Roku boxes at the same time!").

The thought occurs to me that it's funny how the most profitable FiOS systems for Verizon are the ones it no longer owns. The ones it sold to Frontier and FairPoint (along with copper assets it no longer wanted) recouped most of Verizon's capital expense outlay, tax-free no less.

I never understood why VZ unloaded those. Could they not sell the copper and keep the fiber?

Frontier seemed to be trying to run those people off to Comcast.

EDIT: I should add that the previous residents of my house were DirecTV customers, so they probably think that because the dish is there, that I'll magically want their service. When they don't force me to buy Sunday Ticket to see the games I can here on basic cable, maybe we'll talk.

Your guess is as good as mine, especially for the Pacific Northwest and Indiana, the markets Frontier got. It's my understanding that Frontier actively argued against taking the fiber systems, but Verizon said "take them or no deal," so Frontier acquiesced because they wanted to expand their footprint. I suppose that Verizon didn't want to operate islands of fiber with no other Verizon facilities for hundreds of miles.

Frontier stopped trying to run people (and by "people," I mean "potential television subscribers") off by mid-last year. Now they've even gotten into the full swing of things by offering double play bundles and promotional rates. Of course, this could be trying to get people back on the fiber systems because there's a rumor going around that Frontier wants to buy Verizon's copper lines in Texas and California. If they do that and they can make the fiber systems Verizon foisted on them look good enough, maybe they can hand them back to Verizon... (Nah, it's probably something silly like not wasting all this money on an expensive fiber network and figuring they should actually try to turn a profit or something. )

reply to osravens
In many markets, Verizon's competition is Comcast. $65 gets...wait for it...15 Mbps down, 3 Mbps up on Comcast, when you include modem rental. And I guarantee that latency and jitter are better on VZ.

Prices...and service speeds...go up quickly from there. But speeds go up more quickly than prices, because shoving more Mbps over a GPON network isn't nearly as big of a deal as it is on a more capacity-constrained HFC network (GPON has nearly 2.5 Gbps of downstream capacity and around 1.25 Gbps of upstream...an 8x3 channel typical DOCSIS network serves more subscribers with 300 Mbps down, 70 mbps up).

Verizon is playing to its strengths more than ever before; their network costs more money to build than cable, but it can run circles around cable performance-wise. Verizon could offer a gigabit down and 500 Mbps up with lower contention than cable could offer 150 Mbps down, 35 Mbps up. But that gigabit will likely cost more because...surprise...Verizon paid a lot to lay iber and wants to get its investment back.

reply to osravens
Verizon invested over $30 BILLION dollars in FTTP/FIOS.. I doubt they'd want to kill it.. what's more likely is they are positioning themselves for a fight when the DOJ comes a-callin to see why the 1996 and 2005 telecom & cablecom reform acts haven't brought competition to the whole country.. and they have the big 3 telecom & cablecom companies to blame (some more than others, of course).

Verizon, AT&T and Comcast are responsible for some of the most incidious STATE LAWS to block 3rd party ISP's and municipal governments from deploying networks in places where they've refused, delayed and outright let obsolete technologies wither on the vine while they keep running to the bank with customers who have no other choice! These companies will eventually have to answer to one of three government check's on their franchise monopoly & duopolies... the DOJ, FCC and congress will weigh in on how to fix the issue of lack of competition. Don't think that the 6-strikes copyright violation plan will be the Texas style side-step to keep blocking real reforms!