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Summary:

Verizon reported second-quarter results this morning, and saw revenue rise while profits fell. But those of us who care about the fate of broadband should note that the carrier is ramping up its fiber-to-the-home triple play — and likely stealing customers from cable providers. Verizon added […]

verizonlogoVerizon reported second-quarter results this morning, and saw revenue rise while profits fell. But those of us who care about the fate of broadband should note that the carrier is ramping up its fiber-to-the-home triple play — and likely stealing customers from cable providers. Verizon added 303,000 net new FiOS fiber-to-the-home Internet customers, to end the quarter with 3.1 million of them. That’s a 56 percent growth in subscribers from the previous year for the super-fast service. Verizon also added 300,000 net new FiOS TV customers, bringing its total to 2.5 million FiOS TV consumers by the end of the quarter — an 82 percent boost from the year prior.

FiOS, which is the driving force behind several cable operators’ planned DOCSIS 3.0 upgrades that will boost broadband speeds to 50Mbps or even 100Mbps, is putting pressure on the cable industry. FiOS Internet sales penetration (sales as a percentage of potential customers) increased to 28.1 percent, compared with 23.5 percent during the same period a year ago, while FiOS TV sales penetration increased to 24.6 percent, compared with 19.7 percent from the year before. FiOS TV service was available for sale to 10.3 million premises by the end of the quarter.

Some of that penetration growth appears to be coming at the expense of cable providers, although it’s hard to be sure because various cable operators don’t have footprints that directly compete with Verizon’s. However, Comcast which competes with Verizon in 12 percent of its footprint, has seen its video subscriber penetration fall to 47.5 percent in the first quarter of the year (it won’t report second-quarter results until Aug. 6) from 49.5 percent in the first quarter of 2008. On the broadband side, it’s faring better — having boosted its penetration to 30.2 percent for the first quarter of this year, up from 28.4 percent for the same period in 2008. That may be in part because of cable’s faster speeds when compared with regular DSL from telcos.

Cablevision, which competes with Verizon in 30 percent of its footprint and has been aggressive about countering FiOS speeds, has seen a 1.5 percent drop in penetration for video subscribers, according to its first-quarter 2009 results. (Cablevision reports second-quarter numbers on July 30.) As those cable providers start reporting their numbers, keep an eye on how penetration rates are faring. They may claim it’s a lousy economy, but FiOS may have something to do with it.

  1. Nice.
    My local phone company just did underground work 5 blocks away and increased my DSL loop length to where my DSL is no longer fast and never will be again, so after 10 years with the same ISP I’m now looking for a new internet provider.
    This information on Fios was helpful; may go that direction.

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  2. In Cablevision’s case I’m guessing it has something to do with the benefits of FiOS, but also with the overall terrible service this company provides. I have had more problems than I can remember with Cablevision over the years, but for years they were the only real choice I had. Many customers like me are eagerly switching to Verizon now that there is finally competition. Maybe Cablevision will adapt to meet the challenge, but they’ve given absolutely no sign over the years that they have any inclination to do so

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  3. Cablevision has been aggressive about advertising for their speeds, but in reality the fastest speeds are only available in select neighborhoods. Here’s a link to a speed test the Long Island Business Blog did between the Cablevision and Fios services. Long story short, the Fios service was a better deal and offered faster upload speeds, but like Lavar Burton says, don’t take my word for it:
    http://libn.com/libizblog/2009/06/05/speedtest-the-verdict/

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    1. majortom1981 Tuesday, July 28, 2009

      Cablevisions speeds are offered through their whole footprint. (That link is a blog that doesnt say anywhere that its only available in select areas but remember the competitor fios is only available in select areas)

      Verizon cherry picks which blocks get fios. Yes you heard that right blocks. My parents can get fios but me who makes double what they make wont and the verizon fios rep told me my block will never get fios even though I am in the same town which approved the franchise agreement.

      So cablevision might lose some subscribers but if verizon keeps it up they will also.

      Also that link says you will need an 802.11n router but that goes for all high speed service including if fios comes out with anything higher.

      Also with verizon known to be neglecting its dsl networks even in areas that dont have fios i think we will see verizon to stop gaining customers.

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  4. [...] FiOS TV Hits 2.5 Million Subscribers; telco’s rise is putting pressure on the cable companies. (GigaOM) [...]

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  5. [...] we learn that they are aggressively adding FiOS TV and broadband customers, and the rumor is they are hurrying to launch their LTE network in early 2010, perhaps for [...]

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  6. Fiber will help to realize the web promise. Watching a movie steaming on you PC, Having all your files in cloud storage and have access to them from anywhere and anytime.For us ( binfire.com ) the real issue in providing more advanced features has been the users connection speed. When more customers have access to fiber, these limitation will disappear.

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    1. The article states that in the first sentence.

      I’m surprised that the layoffs were officially announced. Verizon has been laying people of for the past 4 years and it never seems to make the news.

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  7. It is true that Verizon FiOS has superior speeds and that is great no doubt, and the fiber optic network definetly is an improvement over copper cables, but cable is more thorough with coverage. FiOS hits specific neighborhoods or sections of areas. Verizon FiOS needs to blanket an area to be a real threat to gain marketshare.

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  8. [...] have been stealing voice and broadband customers for years (although telco TV seems to have helped carriers fight back in the last quarter). But even AT&T’s IPTV service, U-Verse, was delayed with some promised features never [...]

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  9. OPTIMUM OWNS, FIOS BLOWS.
    Firstly Verizon is the most evil teleco i have ever encountered that only spews BS lies and thrives on ppl being ignorant/uninformed. They make ppl think that just because fiber is in the house that means its better == BS. Modern cable infrastructure is mostly fiber, they only use coax from the pole/switchbox to ur house, that saves them and u money on running fiber into the premises which wouldnt add any benefits to the enduser or the cable company. Modern embedded signal processors are now fast enough to transmit data over copper as fast as most fiber implementations. The only advantage fiber has in this situation is that the cable can be longer without needing a repeater to boost the signal(less attenuation). which in the case of cable infrastructure is usually meaningless. So wats left, speed, price, and stability of the service. Since both infrastructures are mostly fiber, the stability is the same, and the speed/price are much much better from optimum. Verizon loves raping their customers. Both TV services offer the same quality HD service so that claim vz makes thats its the best quality, is yet again another lie. So in comparison of FIOS and OOL, only a retard picks FIOS if OOL is an available option.
    I also wanna mention how badely their wireless services are. They use oldschool cdma2000 technology, that in no way is able compete with the speed, quality, and availablity of gsm/umts/hsdpa. For some reason ppl think verizon has the best service, and I think that is due to BS advertisements, and retards trying to justify their expensive crappy phones/service. Also the phones they use are exclusive to them(totalcrap) or are manufacturer modified gsm phones made to work with cdma which are released months after the gsm versions hit the market. The latter are made poorly made cuz they use crappy cdma chips that are bigger and use more power which stresses the original(gsm) design of those phones resulting in inferior overall quality compared to their gsm counterparts.
    P.S. the security on the VZWireless network is a joke, a 10yr old with some skills can evesdrop on and/or hijack any phonecalls u make.
    P.P.S evesdropping/hijacking is also possible on gsm but is harder to achieve. Shh ;)

    F U VZ, You Dirty SCUMBAGS

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