Who Wins: Verizon FiOS vs AT&T U-Verse

34 Comments

Verizon recently launched its FiOS TV and fiber-based broadband service in New York City, The New York Times is taking stock of the service, which seems to be doing well. Verizon’s $23 billion investment into FiOS wasn’t viewed kindly, and Wall Street viewed AT&T’s cheaper U-Verse plan as more practical and affordable.

Despite such early shellacking on Wall Street, the company’s decision to go with the more expensive fiber is proving to be smarter, even though it is still not clear if (and when) Verizon is going to start making big money on its bet.

“If I were an auto dealer and I wanted to give people a Maserati for the price of a Volkswagen, I’d have some seriously happy customers,” said Craig Moffett, an analyst with Sanford C. Bernstein. “My problem would be whether I could earn a decent return doing it.”

Moffet estimates that the company is going to lose about $6 billion on FiOS all told. Others feel that 20 percent buy-in from potential customers makes it profitable. Wall Street seems to have warmed up to the Verizon story, impressed perhaps by its recent growth, especially when stacked up against AT&T.

My view is that all U.S. phone companies are in trouble because of major shifts that are going on in the industry. Verizon, with FiOS, at least has an offering that addresses the needs of the future broadband users. Whether they make money on it, who knows.

At the end of second quarter 2008, Verizon had more than 2 million FiOS Internet users and 1.4 million FiOS television users. In comparison, AT&T has 549,000 subscribers for its TV service. Verizon is offering better speeds than AT&T and is very competitive with its local cable rivals such as Time Warner Cable and Cablevision. In comparison, AT&T so far offers regular DSL packages whose speeds are spanked silly by cable offerings.

Anecdotally (and acknowledging the fact that technology blogs are skewed in favor of early adopters), it seems Verizon FiOS subscribers are happier with their Internet connections. I have no gauge of people’s reactions to FiOS TV. In comparison, AT&T U-Verse seems to elicit a response that can be summed up in one word: meh!

What do you guys think? Take our poll and share your thoughts.

34 Comments

Jerrell

There are some good comments here, and I know that FiOS is up and coming in a big way.

However, if you check the actual pricing for services, you can see AT&T Uverse is still cheaper.

Verizon is about $120.00 for a decent package, but Uverse bundles are about $30.00 cheaper for comparable. Here’s the Uverse deal:
http://www.att-services.net/att-u-verse.html

charlie

I have UVerse. I train FiOS Support. It’s been fun to watch the competition between ATT and Verizon. AT&T will never catch Verizon on the Internet Speed side of things but I have seen Verizon, lately, add more features to its DVRs and general in-home Video Network that have been available to UVerse users for some time now. For instance, ATT’s current ability to control the DVR (setting up recordings, scheduling, viewing, etc). Verizon does not have this. Its MultiRoom DVR package only allows one to view recorded programs from the dummy boxes and it is an added cost to have that package. Also, the WebRemote Package — this had been available at ATT for a long time before Verizon launched its version. The picture quality does not compare – Verizon’s is much better (not just because I train it but I have seen this over and over again at friends’ and family’s homes) IPTV does have its problems – latency, etc.

girly girl

FIOS VS U-VERSE

What I have is a direct relationship with both companies. I have worked for both in FIOS AND U-VERSE Departments. I also have an BSIT degree and a good understanding for computer networks. I am also a guy that loves TV and ESPN, Sci-Fi, History CH, Smithsonian to name a few. I guess that’s mostly what I watch but my opinion about the two services is based on what I know and what I have experienced over the last few years. Getting right to the point, FTTP is always better than FTTN, PERIOD. Why would I limit my data availability if I had the choice? Two, future advancements is not limited to the condition of OLD COPPER. U-verse is limited to four TV streams, MAX TWO HI DEF; I currently have four HI DEF TV’S. (TWO KIDS, MASTER AND LIVING AREA). I could not get hi-definition to all TV’s on deferent channels with U-VERSE. The prices of TV’S are coming down and they will continue in the future. That said, IPTV is great if not for the limitations of the copper network that AT&T uses. NOISE, ADSL CROSSTALK, BAD WIRE, PACKET LOSS, ERRORS ONLY BECAUSE OF THE COPPER WILL ALWAYS BE PRESENT IN U-VERSE Unless they replace the cable. How costly would that be? Copper, man power and the upcoming strike…WOW. I would like to know what everyone out here thinks and do they see it like I do. Also, the benefit of fiber to the prem removes the bandwidth issues and will provide a platform for advancements in the future. 4, 6, 8 Hi Def TV’s 15, 20 30Mgs-DS, 5-30Mgs-US and with no loss in TV quality and or any limit in video streams. Oh yes, FIOS is not full IPTV, but if they decide to do so they can with no issues and or problems but the code used to do it. As a past employee of both (I would choose FIOS without a second thought. That’s just my opinion.

Michelle

I am a regular non-tech savvy person who appreciates reading these comments. I ordered U-Verse, which is schedluled for a 2/28 install; but, i’m getting cold feet after looking more closely. The level 2 tech support at att told me fiber to node installation is standand; but fiber to premises is available as a field supervisor call; i’ll have to wait for day of install to make the request. I’m not looking forward to the possible confrontation about that and being labeled as a problem customer even before I get the service. My question is, if i insist on fiber to premises install, will that give me results more similar to FIOS. I really wanted FIOS but it’s not coming to my area and i’m tired of tha satelite problems.

David

I disagree with AT&T. I was once the U-verse tech and had a real look at them both. I worked on uverse from the start and now have FIOS. I will always believe that its better to have FTTP than FTTN and that the limit of 4 streams of TV, two hidef is one factor that has stopped many people from leaving cable and sat service. I have three TV’s and all are HI def on different ch and I have 15Mgs ds and 5Mgs US with no problem. Try that with u-verse, you can’t. I know of people that have installed u-verse and have removed it when it was understood that they could not get more than two hi def signals. I guess thats better than before, it was one stream for about a year into the service in the LA area. Penny wise and a pound foolish is the truth.

Brendan

The U-Verse service offered by AT&T is the most cost effective solution in the industry at the moment as it offers you acceptable speeds at prices that rival cable companies. The support leaves something to be desired, but currently the service is quite adequate for the residental user. Currently the only advantage I see Verizon having is in the Business Sector where speeds like their fastest internet package offers, 50mbps Download and 20mbps Upload, would even really be needed. As for where Verizon is making it major money it would is not really the wireless sector though as even though they do have quite a large wireless sector they get a larger volume of income from the business sector which relies largely on fibre optic communications. This is where I see the FTTP rollouts really benefiting them. These FTTP rollouts by Verzion are ultimately providing better resources for the home based business.

HAwkish

I think AT&T is the wiser one overall. AT&T is cranking out the U-verse installs on a faster and BROADER national scale than Verizon. Yes, FTTP is much better than FTTN. But…., All AT&T’s gotta do is get the customers with U-verse tv, hispeed internet, and U-verse voice ( which allows you to merge your cell and home phone messaging among other things). Then they whip out the fiber the rest of the way at thier convenience. AT&T is already rolling out FTTP in all new areas. Verizon will probably be way behind except in “Verizon only ” areas.

I’m telling you U-verse works fine if you are near the Xbox (< 3000 ft )don’t have a impedence mismatch on the drop line (for ex. 22 ga. to 26ga wire or any other gauge size change), good coax or cat5, cat6 even better and clean tight connections. My internet speed doesn’t really matter to me, just as long as it stays up and running.

Jeff

I sure am glad you chimed in, Jack. I just signed up for U-Verse here in Columbus and thought I may have made a big mistake leaving Time Warner from reading all of the proceeding comments. I hope to have the same experience you are reporting. Once it is installed in mid-December I will report what I find.

Jack

We live in Oakwood, Ohio, near Dayton. We got rid of Time-Warner and got ATT U-verse at the end of September. I think U-verse is superior to the cable service we had. I now get many more channels, including many more HD channels. Pictures on our plasma TV are much clearer and noise-free. We only have the one TV. We can record 2 HD and 2 non-HD simultaneously while using two hard-wired computers and two wireless laptops. The wireless signal strength is better than we had before. We can use VOIP with video between here and Germany without a problem. I’ve read some of the earlier comments on U-verse that suggest limitations and problems that we haven’t encountered. I believe ATT just introduced U-verse in this area, and I conclude that the previously-described issues must have been worked out before we signed up. We got the top-end tv-phone-internet package with internet speed guaranteed at 6 MB/sec or better. (In the tests I’ve run, it clocks at 9+ mbps to 17+ mbps download and 900+ mbps upload.) Installation took about three hours. I think ATT will be able to get as many customers as they want in this area. Time-Warner just dropped NBC from their channel offering because the local NBC outlet wants 30 cents more per customer per month. And Time-Warner converter boxes have had a lot of problems (I had to replace my HD converter box five times in a little over a year.)

Ray Delagarza

Finally someone decided to address a couple of issues. First, and foremost, is the initial capital costs associated with providing media based services. Offer TV over existing facilities with minimal costs boosts net income. ROI is quick and Wall Street loves that. New sub-divisions will be served to the home with fiber. The transition will occur over time, but mass coverage helps drive revenue to allow for the upgrades in the future.

As for the speed of a copper based service, most average consumers do not need high speed, low latency connectivity. People speak of VoIP, but that is what the voice service with AT&T is. LD costs are going to be a thing of the past. A global IP network, based on MPLS within the core will suffice. “On Net” calls will eventually be free regardless of where you are at in the world. There are only a couple of companies with a world wide network that can capitalize on this strategy, with AT&T being the leader.

So I will continue to enjoy my U-Verse service and all of the niceties that come with it. I have not heard a single complaint in the Northern Ohio region and people are begging for it over Time Warner and Cox Cable due to the features. For the average Joe it is great. Yeah, they will have to do something down the road for the next generation, but you have to make money in order to upgrade the infrastructure. I like the plan and I like my returns on my AT&T stock.

By the way, check out the Time Warner Telecom stock. 20% loss in one day due to revenue concerns. Tough to continue to supplement voice and data networking when the Bells are moving in. So TW and Comcast can continue to steal away the $23 voice lines while the phone company continues to capture the $100 TV services. The answer to the question on who is going to win out is simple: The Bell tolls for thee.

Greg

“regular DSL packages whose speeds are spanked silly by cable offerings”

I agree with Paddy. My cable provider markets a 10 Mbps connection, while my AT&T DSL connection is a mere 6 Mbps. How much does a consumer need? I’ve had both services at the same address and I cannot tell the difference. Honestly, most web servers aren’t going to serve up a web content at 10 Mbps anyway.

Paddy

I see this is what Uverse offers for Internet speed:
Downstream up to 10 Mbps Upstream up to 1.5 Mbps.
Why would I need more than that, at this point?
Everyone also seems to ignore the fact that all new subdivisions in AT&T areas are being constructed with fiber to the home, only existing plant is being converted fiber to the node.

Rocky Agrawal

I have been less than thrilled with the offerings on AT&T’s U-Verse. They actually have me wishing I could get Comcast! I live in a SF building where management has an exclusive arrangement (i.e. kickback) with AT&T.

I’d get FIOS in a heartbeat if it were an option.

Ajay

Raymond: You’re right, I’m not differentiating between upstream and downstream and the difference is dramatic. However, even upstream ranges between 256 Kbps and 1-2 Mbps, many times more than the 40-80 Kbps necessary for VoIP. The real problem for VoIP on any of these connections is latency. If I run bit torrent or some other p2p service while using VoIP, the call quality is degraded regardless of how high my Mbps cap is.

Bernie

What get’s lost in this argument is that both Verizon and AT&T are effectively wireless companies now, with some wireline assets. In the grand scheme of things, both of them can afford to be wrong with their wireline strategy becuase its not the core of their business going forward. Whichever one selected the wrong strategy will have the wherewithal to adjust, change course, and recover. AT&T’s thinking is, let’s wait a while longer before pulling the trigger, get fiber deeper and deeper into the network, and pull the trigger (or not) once we have more insight into the marketplace. If cable takes 30% of my wireline voice customers in the interim, so what. Oh and by the way, let Verizon lower our eventual costs (should we decide to go that route) because of the massive investment they’re putting into FTTH, and lowering the per unit costs across the board for everyone.

Not arguing that Verizon is wrong either. They’ve pulled the trigger, and will probably be better for it in the future. But FiOS is no slam dunk. They don’t exactly have Cablevision shaking in their boots.

The point is, there is no absolute right or wrong here. Just different approaches to the same end.

Raymond Padilla

@Ajay You’re not differentiating between upstream and downstream. The difference in upstream between standard DSL and FIOS is dramatic. It would certainly make a big difference in VoIP call quality. Don’t you agree?

Doug Mohney

From what I’ve seen/heard, People in AT&T/cable-co markets (Like SF) should hope that ClearWire WiMAX comes to town to offer up some better competition.

AT&T needs to fear the day when Comcast and other cable providers decides to get serious and drops DOCSIS 3.0 into their plant. U-Verse can’t compete head-to-head on video as it is. Better video and high(er) speed internet and phone and it’s serious ugly for AT&T U-Verse.

Meanwhile, if you put FiOS side-by-side with a cable plant with DOCSIS 3.0, it’s a much more interesting horse race in terms of content offerings and Internet speed capacity. THIS is the battle Verizon knows it will have to fight on the East Coast over the next decade and with FiOS they can offer a competitive product.

However, Verizon needs to polish their customer service. It is frightening for me to say this, but Cox cable customer service is *ulp* BETTER.

Ajay

Raymond: You’re right that there are a minority of people who use VoIP for international calls and don’t know anything about technology, so they mistakenly think that a difference between 1-3 Mbps and 5-10 Mbps makes a difference for audio calls that only take 40-80 Kbps. More likely there are other packet prioritization and latency issues that might affect sound quality between ISPs: it’s not a speed issue.

Raymond Padilla

@Ajay It’s certainly not the majority, but I know a lot of Asian-Americans ages 40+ that care a lot about their Internet speeds because they keep in touch with relatives via VoIP. One of the households I mentioned in my previous post is headed up by an old Filipino-American couple that opted for FIOS because it made their VoIP calls sounds better.

Ajay

I agree with Vlad. Outside the small group of techies who read this blog, most people don’t care about anything beyond 1-2 Mbps, particularly since video on the internet is still not there yet, as there’s no HD or even SD and nobody’s making money. Given all this, the more cost-effective approach from AT&T makes more sense and will win out. Wall Street doesn’t know much about tech but they can crunch numbers and are usually right about basic stuff like this; it’s high-flying tech stuff where they lose their heads.

Raymond Padilla

I wish we had a FIOS equivalent in SF. A few of my friends in NY have FIOS and it is just godly. Too bad AT&T has a stranglehold in the Bay Area, allowing it to offer its pathetic Internet service. I’ve been satisfied with Comcast’s service for the last few years, but it’s still a bit of a joke compared to FIOS, especially the upstream.

Vlad (Small Business Blog)

While comparing these three services I believe one issue got overlooked – marketing. What AT&T and cable companies do is wait until Verizon (at their own expense) educates everyone and their grandmothers on why high speed is important. It will be easier for them to deploy networks as late as possible to capture the audience that’s prepared and waiting. As of right now talking to most of the people who pay for cable (discount me) reveals they don’t have a slightest idea what the difference is. They can only see the difference in the Total line of their bill. Whoever gets the best number in that line – wins.

Dan Rayburn

The cable companies don’t get it. They have slower connections, fewer TV channels, entry level routers AND cost more. If customers want bundled services, FiOS is the way to go. For customers who only want TV or phone, FiOS may not be for that crowd.

I’ve had FiOS internet for 3+ years now and there is no comparison to cable. I’ve had FiOS TV for close to a year and it makes traditional cable look like garbage. Not to mention companies like Cablevision don’t even have many of the TV channels that FiOS has, like the NFL Network. The fact Cablevision keeps offering me hundreds of dollars to switch back to them, for a slower connection and higher price, shows they still don’t get it.

As for AT&T’s U-verse service, that should not even be allowed to be compared to Verizon’s FiOS. Putting fiber-to-the-premises like FiOS does versus fiber-to-the-cabinet like AT&T means that while Verizon is spending billions more, they are future-proofing their business.

Who doesn’t want to pay $99 a month for a 20MB connection, unlimited long-distance calls and TV service with one of the best lineups around? And I know it will shock most folks, as it did me, but Verizon’s technical support for FiOS is so good it’s scarry. It’s not like dealing with the phone company.

Wall Street is always so focused on making their predictions in a bubble. They look at the offering or service on paper, run numbers and think they know the whole story. How about they actually go out and talk to customers of the service? Speak to the people who are actually paying for the service and get some real insight into the business and offering.

NJ Broadband

Given the course of time here in NJ, what the heck were you smoking? Left FIOS faster than there lousy service and billing.

For everyone stuck without Verizon.

I had the absolute pleasure to live in Tampa, Florida in a local service area that was served by Verizon for all of our needs. We had fios right to the outside service point, provided by Verizon right up to the box on the outside of our residence. Cable tv, wireless, and internet access as well as local telephone service bought and paid for a flat fee was nothing short of amazing for us. was an easy descision, as well as an easy installation that just brought myself as a business owner more service options and hsftd OPTIONS than i can ever hope for right now.

i would just like to know what the current Fios hopeful packages offered by verizon for business customers in my area are and what the benefit over ATT would be.

Everything that i try to do just ends up in a bad place with att saying that they dont offer Fios but they will offer a business speed of 6.0 Mbps, with a business account.

I have already had a speed test done on my ADSL line by an att certified tech that upgraded as well as provided the top speed that i could hope to achieve over copper lines.

After seeing his results and also after accepting ATT over old copper lines, the final results

ended up at a miserable 2.5 Mbps Tops for my physical location, after Att corporate suggesting i upgrade my service to 6.0 Mbps Business Dsl, i cancelled any requests to do so after seeing that the maximum bandwidth we could expect was in fact 2.5 MBPS over old ATT copper lines. At the same time they were just more than willing to upgrade us to 6.0 MBPS business dsl, even though the best physical lines we could hope to get from them simply cannot support those speeds.

Ken

Totally agree with this assessment. I live in North Jersey and have Cablevision’s Optimum Online. During the day, I can’t tell whether I have cable or dialup. It becomes that slow. At night, everything is relatively fast, but the daytime speeds are totally unacceptable.

Verizon came through my neighborhood last year to lay down fiber and am seriously thinking about moving over.

I can’t imagine what AT&T was thinking in terms of keeping DSL and waiting til the last minute. Seems rather foolish considering that Verizon has done a great job carpet bombing the area with advertisements about FIOS.

And even if most people don’t keep a home phone, we still need a fast internet connection and not everyone’s cell phone works reliably in their home. Not to mention that wireless internet is a joke in terms of bandwidth.

FIOS TV is incredible also! I have a friend who has the triple play version from Verizon and the picture and sound is amazing. No loss of quality at all and dare I say a better picture than cable?

In the end, each person’s situation is going to be different. Wall Street was definitely short sighted in this regard. But then again, it’s always about the bottomline.

Penny wise, pound foolish is right.

Om Malik

@ Doug Mahoney

Amen to that. I think Wall Street is notoriously clueless about making predictions. It is hard to say what the outcome is going to be, but frankly Verizon has chosen to walk down the right road.

Doug Mohney

Let’s see, the choices are–

1) Deploy FiOS, keep customers from cable triple play, attract customers from cable or

2) Do nothing, watch customer base bleed out.

Supposedly, deploying fiber saves money over (aging, limited to deliver broadband) copper plant once you light the fiber.

AT&T has taken a penny-wise, pound-foolish strategy with consumer broadband that is ultimately going leave them losing a good chunk of their customer base to cable operators (and maybe WiMAX, if ClearWire every gets off the ground…)

big mule

What isn’t mentioned here is that Uverse isn’t DSL. It will has much, much faster speeds than DSL. I’m an installer/repairman for AT&T and I assure you, it is far faster than AT&T standard DSL and any cable DSL I have used. The big problem for AT&T is that in so many areas, the old copper cables have been neglected for years. It seems the company who swears they are all about customer service believes that it’s techs should get X number of jobs done per day. Period. So, in an effort to clear the maximum number of jobs, the copper cable that the big wigs planned to use for the final 3k-5k feet to the customer is in sorry shape. So, it must be repaired and/or replaced to get the new Uverse offering up and running. The only problem? The big wigs don’t realize the shape their facilities are in thanks to middle management insisting that the techs scramble to get the work done. And to top it off, the copper cable required for Uverse to work is 40 or more years old. One entire section of the town I work in everyday has phone cable that was placed in 1947.

If the big wigs could ever get middle management to pull their heads out of their rumps, Uverse could be the best Phone/TV/Internet option out there. However, that could be a big “if”.

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