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Cable Technology Feature Article

June 22, 2010

Verizon Announces One-Month Free FiOS Service to Existing Customers

By Rajani Baburajan, TMCnet Contributor

Verizon Communications  announced it will offer free one month FiOS (News - Alert) Internet and television subscription to its customers, meaning the company will not charge any fees if customers terminate their services after a month.
The new offer is one of the company's strategies to hold its customers back, given the uncertainty surrounding the economy, finds Zacks Investment Research .
Verizon spends around $1,350 to install FiOS Internet and television services. Thus, if customers terminate their services after a month, Verizon has to bear a loss.
Alternatively, if customers continue their service, Verizon's competitive position will increase.
Immediate competitors for Verizon FiOS are Comcast and Cablevision Systems (News - Alert) as well as satellite rivals DirecTV and DISH Network.
Verizon offers FiOS TV services by leveraging its high-speed fiber-to-the-premises or "FTTP" network. The service was enhanced in 2009, including new widgets and applications such as Facebook, Twitter, ESPN (News - Alert) and Internet video services, through its new store "The Widget Bazaar."
Verizon also expanded program content on FiOS TV with the addition of Viacom (News - Alert) promoted movie channel EPIX in October 2009 to offer multi-channel entertainment services.
Moreover, the carrier launched HBO's new Web site "HBO GO" in February 2010. The company is planning to add other major networks like CBS, FOX News, MTV and Hallmark Channel. FiOS TV currently offers 140 HD channels and 2,800 HD movie titles.
Later in May, Time Warner and Verizon announced that the companies are making new television programming available online to Verizon's FiOS TV customers.
At the end of the first quarter 2010, Verizon added 168,000 and 185,000 new customers for its FiOS TV and FiOS Internet services. The penetration rate of FiOS Internet and FiOS TV averaged 28.8 percent and 25.2 percent across all markets, respectively.
According to Zacks, Verizon remains significantly challenged by the intense competition from cable operators, who are aggressively promoting triple-play (voice, Internet and video) services.
Moreover, FiOS TV competes head-to-head with AT&T's (News - Alert) U-verse TV service.
By offering premium content and differentiated features to its FiOS TV offering, Verizon is aiming at countering competition from cable, satellite TV and other competing services.
Expansion of FiOS services remain an integral part of Verizon's long-term growth strategy, Zacks finds. Further with the roll-out of the 4G Long-Term Evolution or "LTE" service, planned for the fourth quarter 2010, Verizon is expected to strengthen Verizon's market position against its major rivals.

Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

Edited by Juliana Kenny