Verizon is again saying FiOS rate hikes are on the horizon. Back in May Verizon CFO Fran Shammo promised that FiOS users would be seeing a number of significant price hikes. Those hikes came alongside the introduction of FiOS Quantum, which not only delivered new speeds -- but also delivered significant price increases. That was on top of significant new price hikes for TV users -- and the elimination of many of the company's more aggressive introductory bundle offers. Speaking about Verizon's latest earnings, Shammo is back this week telling investors that FiOS users can expect another round of price hikes to counter the slowdown in new FiOS subscribers:
quote:With FiOS subscriber growth starting to taper off, Verizon Communications has "refocused more on our profit on the FiOS side" and expects to implement additional price increases on bundles in the third and fourth quarter of 2012, chief financial officer Fran Shammo said. The telco posted net gains of 134,000 FiOS Internet and 120,000 FiOS TV subscribers for the quarter ended June 30 -- well off the pace from the same period a year ago, when the telco had net adds of 184,000 Internet and 189,000 TV subs.
Verizon has been justifying the price hikes by saying the service's good showing in consumer satisfaction studies (FiOS recently came out tops in both Consumer Reports and ACSI rankings) means that the company feels it can charge a premium for the service. They of course ignored stating that a lack of competition allows them to laugh at the idea of competing on price.
Seems like Verizon is taking a page out of the cable company's book of rate hikes. Read a e-mail this morning from Verizon showing a profit from both the wireless and landline side.
Verizon has long-term agreement plans, but in many areas, they also offer month-to-month agreement plans.
In NYC, the only difference between a long-term agreement plan and a month-to-month agreement plan is that you get a 2-year bundle discount instead of a 1-year bundle discount.
Yes, you can choose to sign a contract for fios in order to lock down a lower price and avoid these rate hikes, but they aren't required. You can opt for contract-free fios, but it may cost a little more in the long run.
I myself signed a contract in order to avoid any rate hikes, at least for 2 years.
If I may ask, what was the profit on the wireline side?? It couldnt have been much with an overall decline in revenue on that side of their house.
This was from the e-mail from Verizon. Consolidated
64 cents in diluted earnings per share (EPS), compared with 57 cents per share in 2Q 2011 - a 12.3 percent increase. $9.3 billion in cash flow from operating activities, up 20.1 percent compared with 2Q 2011, leading to $7.8 billion in free cash flow (non-GAAP) in 1H 2012, more than doubling free cash flow generated in 1H 2011. Wireless
7.3 percent year-over-year increase in service revenues in 2Q 2012; 8.6 percent year-over-year increase in retail service revenues; data revenues up 18.5 percent year over year; 30.8 percent operating income margin and 49.0 percent segment EBITDA margin on service revenues (non-GAAP), both record highs. 1.2 million retail net customer additions, excluding acquisitions and adjustments, includes 888,000 retail postpaid net customers; low retail postpaid churn of 0.84 percent; 94.2 million total retail customers; 88.8 million total retail postpaid customers. Wireline
2.5 percent year-over-year increase in consumer revenues, the highest in several years; ARPU (average revenue per user) now tops $100 a month, with 65 percent of consumer revenues generated by FiOS. 134,000 FiOS Internet and 120,000 FiOS Video net additions, with continued increased sales penetration for both products; 5.1 million total FiOS Internet and 4.5 million total FiOS Video customers.
Some people ask why would anyone ever choose cable over Fios if they have that choice.
And the ever increasing Fios prices(going up even faster than cable) is one of the reasons. Another is the never ending grief of dealing with the Verizon billing system, which seems to take months to correct even minor errors.
Also because on the internet side people found that they didn't need or want the higher priced higher speed Fios offerings. And also the fact cable companies have cut very good bundle deals for their customers when Fios is an option for those customers.
I know a few people who have successfully leveraged very good deals from Comcast by threatening to go to Fios.
Agreed! Back to OOL I went.. more than enough for me .... Price is King and the PQ is not that bad.. Fios is better! I have 2 college tuition's coming up( plus mine for my Masters) have not had a raise in 4 years .. etc etc ...
Mitt, I agree with you and Harley. I just cant see how raising prices on an already expensive product helps them. Peopl are watching their money too closely these days for that to help them.
Of course, then the conspiracies come out and maybe this is what they want to happen. Probably not but you never know.
Verizon has really cleaned up it's billing, I've been on fios for a year and a half, I've changed tiers once or twice and never had a billing problem.
Also my speeds are much more consistent than Cablevision and PQ is better, as well as the dvr hardware itself being much better.
I pay less for FIOS than I was paying cablevision. with a quadruple play, 1 dvr and two hd boxes. Price still seems to be a toss up, depending on what promotions you sign on to. I never pay full price for cable or fios I leverage each against each other for the lowest price.
This suggests that Google Fiber may not do so well in KC - there is no evidence to date to indicate they've "innovated" any significant cost-savings that would result in lower monthly costs. They're going to be in for a big surprise if they think Mom is going to spend $70/month for internet.
Likewise for Sonic, though they appear to be cherry-picking their first FTTH zones to assure uptake. When they move beyond the dotcom geek households, they'd better be prepared to offer an "economy tier".
Verizon had better be careful, or they might price themselves out of what is an all ready competitive market.
I currently have Fios Internet. No other service. I suspended the TV when I lost my second job, and haven't had home phone for a while now.
The only thing I really watch on "live" TV is the local news and a baseball game from time to time. I'm doing just fine with Netflix streaming to my TV for 8 bucks a month.
Since I've essentially replaced my cable subscription with the Nexflix subscription. I bought one of those newfangled net enabled TV's back when hurricane Irene sent a lightning bolt my way last year & blew out half the electronics in my home.
So for now, I'll stick with Fios. I have never had billing issues with Verizon, and have no complaint in that department. So long as I'm using Netflix for my TV I will still pay a few bucks more to avoid late afternoon congestion & caps.
They caused the lack of subscribers by stopping expansion
I would think the slowdown in subscribers is because they aren't expanding anymore. If they aren't expanding then there isn't even an option for new people to sign up. They basically limit their maximum subscriber pool all by themselves.
Re: They caused the lack of subscribers by stopping expansion
They're also facing surprisingly stiff opposition from the likes of Comcast, Cablevision and Time Warner Cable, who are all ramping up internet speeds, offering crazy intro bundle deals and providing as many value-adds as they can to stop customers from leaving or win them back.
As good as FiOS Internet is, frankly that's the only real differentiator they've got. Their TV product is not all that amazing and their phone product is not much better than standard POTS.
As good as FiOS Internet is, frankly that's the only real differentiator they've got. Their TV product is not all that amazing and their phone product is not much better than standard POTS.
How is the phone product "better" than standard POTS? Standard POTS doesn't rely on power being available at the customer premises.
Yep. When your neighbor 100 feet away can get FiOS, and you can't (and never will), that is just terrible advertising.
Adding on top that it is more expensive is a huge turn off.
This tech is supposed to be cheaper than cable is, but since telcos don't want to be billed like utilities yet want to be treated like them, this bullshit spawns this price gouging model.
Re: They caused the lack of subscribers by stopping expansion
The are "fulfilling franchise agreements" where it suits them. They are not doing any new expansion. I hear every other day how NJ was supposed to be 100% wired and VZ is cobbling stuff together to get at those metrics and never intended to wire NJ 100% with fiber. On top of that they were getting government $$$ and breaks from NJ, and nobody calls them out. Manhattan isn't doing much better.
On top of this, record profits, and every other day Shammo comes out brazenly saying, FU we are going to raise rates everywhere, and when we are done, we are going to do it again.
Cable w/ Docsis 3 is competitive and can handle 99$ and while their 3 play bundles are me too, their internet-only deals are 50% less than verizon.
Re: They caused the lack of subscribers by stopping expansion
Granted its not in my area but in my drive in RI they are wiring up some new towns. They have the black cylinders attached to the fiber strapped to the bottom of the poles.
I would think the slowdown in subscribers is because they aren't expanding anymore. If they aren't expanding then there isn't even an option for new people to sign up. They basically limit their maximum subscriber pool all by themselves.
This was my first thought upon reading the article.
Seems they are pushing people away.... 2 friends did surprisingly 2 small businesses that I frequent went back to TWC and CV. just an observation... Lee
Do you really think that idiot CFO Shammu (or any other top executive like her) has ANY understanding of what it is like the for the typical household today when it comes to the dire economic times? Of course not, not that these sociopaths would give two craps anyhow, they actually enjoy sucking the blood out of people.
The only positive thing you can say about their obliviousness and arrogance is that they will, yes WILL MURDER the goose that laid the golden egg.
You are already considered the most expensive option and instead of competing on price you raise prices. WTF? That makes no sense when I can go to Comcast just about any day of the week and get roughly the same service for roughly less money...
As in investor I want you to build FIOS out to everyone you can, market the hell out of it, make it affordable and then we all will make money. Sadly this requires a long term view and that's something Wall Street doesn't understand. Show me quarters of steady profits and expanding marketshare as that's what builds solid business that endures.
When I moved last year I was over the moon to finally live where FiOS was available. Having to be stuck with Time Warner and their crappy 15/1 triple service for 165.00/month it was great to get away from them for the 35/35 FiOS triple month-by-month 135.00. Now, a year later, my bill at the end of this month will probably be around 170.00. Every single aspect of my service has gone up. When I called about changing my service there was nothing I could do to reduce my bill. If I went for a contract... my price would go up. Drop the phone... price stays the same. Guess what? Verizon - in less than a year - has priced themselves past Time Warner.
Now I have to change my service again because I can't absorb all these goddamn increases. Fuck!
20/2 - 1 year promo $40 (2.50 to rent modem) Voip, your choice $8 Netflix - $8 OTA - Free, or use some media center analog to record.
$58 ish
If you are lazy you can pay for basic which is like $10/month. It looks like Aereo is going to play.. No need for a DVR.
Pocket the other $110/month
Go prepaid on your phone and save more.
TWC has really caught up to FIOS in my area. My neighbor has ultimate 50/5 and it flies. I ONLY have 25/25 on FIOS.
I know you are in the same cluster as me (Buffalo).
The point is DOCSIS 3 and TWC have really stepped it up and I am impressed. When I had TWC other than their poor CS the modem was rock solid. On two occasions the UNY weather killed my outside coax (not a prob w/ fiber).
While it is true I need neither phone or TV I do, however, require internet to communicate. So, yes, I could live with free dial up. What my point was just because another ISP (TW) has jacked their prices to the heavens it doesn't mean VZ should. Justifying price increase piled upon price increase because your competitor does says more about your company than it does about it's competitors.
Wait, I though Fiber to the Home was where we all needed to go?
As triple play services, Verizon's FTTH, AT&T's VDSL and Cable aren't meant to be substantially different. To be a player, you must have a video product. It has been substantially easier for the Cablecos to offer phone than for Verizon, et al. to offer Video. Margins are razor thin and it isn't getting easier in the retrans wars (Aereo may help).
Most Cablecos are extremely satisified with their phone product. I doubt you'd find the same in telcoland with video. IPTV has been notoriously difficult and expensive to deploy.
Between paying for their FTTH network and paying for video rights, expect more of these increases.
So they're going to raise prices because they're not seeing enough growth?
How exactly is that going to encourage growth now?
Stupid, Verizon.
It's called yield management. It the same reason the airlines charge $500 for a 200 mile trip, even though there are empty seats on the plane. They could lower fares and fill more seats, but make less money.
So they're going to raise prices because they're not seeing enough growth?
How exactly is that going to encourage growth now?
Stupid, Verizon.
It's called yield management. It the same reason the airlines charge $500 for a 200 mile trip, even though there are empty seats on the plane. They could lower fares and fill more seats, but make less money.
You could take bus or train and it would only cost less than HALF that price. Also, you can aruge the time wasted at airport security (not to metion violation of your privacy) and on the tarmack would even out the time to travel, that's why people take trips on planes of 1k miles or more. I think this is a bad analogy. There are many products and services where consumers fight back when they feel they are being gouged and telecom happens to be one of them.
Verizon will raise prices, and that somehow gets you MORE customers?
yeah, lemme get back to you on that one..
when gasoline is $5 a gallon do you buy MORE gasoline or do you find ways to CUT BACK being gouged?
again keep applying the logic that it will keep going up, the main difference is that internet, phone and cable-tv aren't dire necessities-- although you could argue access to 911 is important which you can get for free with a cellphone not activated anyway.
logic dictates that as the prices go up and fewer people can afford the services, that Verizon will have fewer customers.. starting out at about 25% marketshare in deployed FIOS geographies doesn't leave very far downward to go... although on wireless they have plenty of breathing room with almost 40% market share.
As I now keep saying consumers will look for the best deal to get the best most reliable speed. Wireless or wired. I cut back to internet only at the two locations I live and work at. Our att fam plan is about 130 mo for 4 phones. Loved the ATT fam data plan that came out yesterday. (NOT) What a crappy deal. I sort of figured that would be the case. Everything is now data. ATT and vz know that. So now they give voice away basically and charge a premium for data. Voice is really not a big piece of this any more. I really do see a "merging" (more seamless use) of LTE and wifi over the long haul as LTE just cannot handle the long term growth. So now look for att and vz to figure out how they can charge both ends more for wifi. no more free (or 1/2 price) lunches. We have to make sure the folks like Marissa Mayer get their millions. they deserve it right? lol what ever happened to this
I have been with Verizon for over 10 years, five with FIOS. My contract has another 19 months to go since they extended it when I switched to DV. If there is another raise in either equipment prices or monthly rates, I will switch back to Cox, who is paying the ETF if you switch from FIOS. Enough is enough.
I also have Verizon Wireless for about the same time frame. They are doing the same thing. Time to rethink that strategy also. There are also other wireless vendors that are paying the ETF.
How many times can you shoot yourself in the foot before you feel it?
If you live in a market with both FiOS and cable, youll always pay the cheaper of the two prices, for the better of the two services if you call retentions and mention that you received a competing offer (without outright threatening).
Im paying $69/month ($85 with taxes) for 25/25 internet, Extreme HD, and phone. Its been good for two years, and I anticipate that I can use the same strategy again later :P
If I may add though, if theres anyone who knows who to squander a good product better than Verizon, its James Dolan and the Cablevision folk. #ByeByeJLin
Verizon hates the middle class but loves their money!
Funny they keep raising prices and profit yet refuse to Negotiate fairly with 45000 of their workers on the landline and wireless side (yes there are a few unionized wireless workers).They thousands per worker in givebacks to which the union workers already agreed to an increase in medical benefit costs but refuse any more givebacks while the CEO and board members receive millions for staring at EACHOTHER. It's a joke and the arrogance to keep raising prices on customers just because they can. Once again when is enough enough. Billions in profit a 300% raise for the CEO and once again they want the little guys building and maintaining their network to do it for less and less while they and their pockets get fatter and fatter. To boot on Thursday the union said ok bring in a federal regulator and we will agree to what they feel is fair and guess what Verizon said no! No mediator! Why do think that is? Is because they are afraid the mediator is going to say are you on glue Verizon? Your making billions and keep raising execs pay but want to lower pay for your workers, raise their medical, kill their retirement benefits, contract their work out, ship more customer service jobs to India all while not paying any taxes in 2010 and 2011. Sorry pay your workers and give them a 3% raise of which they haven't had one in years since your board approved a 300% raise for your CEO while paying board members millions more. Verizon exca are thieves and part of the reason this country is going in the toilet. They rob the middle class and keep shrinking it while paying lobbyists to push through their proposed spectrum deal with 4 other cable companies. If you think your cable bill expensive now wait till they pay off the FCC to pass this thing and the cable companies are no longer competing with EACHOTHER and are cross selling eqchothers products. It's already happening. That's how arrogant Verizon is they went ahead with Comcast and are already cross selling eqchothers products so that neither has to build out their network anymore and save $ while being the only available service in their respective areas. Cancel your Verizon service and support the middle class!