Blog Post

Verizon's FiOS Bet Is Paying Off

Verizon Communications (s VZ) reported a strong first quarter for 2009, growing profits and sales over the previous period a year ago. The carrier reported net income of $3.21 billion and increased sales to $26.59 billion. The 12 percent boost in sales from the same period last year was driven in part by gains from Verizon’s acquisition of Alltel. Verizon’s wireless business showed strong growth, as did its FiOS product.

On the wireline side, Verizon’s investments in laying fiber to the home for its FiOS product are resulting in a 13.7 percent increase in average revenue per user, and the take rate on its FiOS service is up over the previous year, despite the poor economy. The carrier strung fiber to about 500,000 premises during the quarter, and added 299,000 net new FiOS TV customers and 298,000 net new FiOS Internet customers during the quarter. It now has 2.2 million FiOS TV customers and 2.8 million FiOS Internet customers. As of the end of the quarter, the FiOS network passed 13.2 million premises. Verizon’s wired broadband connections increased by 252,000 from the fourth quarter of 2008, despite it losing 46,000 DSL-based Verizon High-Speed Internet connections.

On the wireless side, Verizon added 1.3 million subscribers, more than rival AT&T’s (s T) 1.2 million added during the quarter, despite AT&T’s lock on the iPhone. However, subscribers using the iPhone provide a much higher average revenue per user (ARPU) than other wireless subscribers on both AT&T and Verizon, which is why Verizon is trying to woo Apple (s aapl).

Verizon has 86.6 million total wireless subscribers, making it the largest cell phone company in the U.S. Verizon gained 13.2 million of those through the Alltel deal. Data revenue grew by more than 50 percent year-over-year and comprised about 27 percent of Verizon’s wireless service revenue.

21 Responses to “Verizon's FiOS Bet Is Paying Off”

  1. Seems like Verizon continues to put itself in a better position than AT&T when it comes to networks.

    On the wireless side, AT&T and Verizon are fighting over the Verizon ad’s that mock AT&T limited 3G coverage (Verizon 3G coverage is 5x more).

    On the home broadband side, Verizon’s FiOS costing a lot more to deploy, but the FiOS network will not reach limits in the forseeable future whereas AT&T U-verse will not be getting much faster. Currently AT&T can only squeeze 2 compressed HD streams for U-verse (3 streams may be coming soon).

  2. T. Murphy

    It’s a shame they can’t fix their network issues. I have a friend in Westchester NY who can’t connect to my IP. Why? My IP is 89.xxx.xxx.xxx and Verizon appear to have blocked that entire class A range. They won’t even fix it despite numerous calls on the part of my friend. Their network staff appear to be incompetent.

    So.. any of you on FiOS.. can you connect to an 89.*.*.* IP?

  3. FiOS topologies (fiber to the home) may not necessarily help out unless of course they explicitly included backhaul routes or are near backhaul routes (tower to CO)… Metro fiber topologies matter more in LTE/mobile-data backhaul. dunno if Verizon is any better placed than AT&T here. who knows maybe old MFN or American Fiber Systems may have more fiber near potential LTE backhaul sites. Worth asking them –

  4. I have a question. I read somewhere (can’t recall source) that Verizon will likely use it’s FiOS fiber as the backhaul for it’s next-generation LTE network. The writer went on to state even though LTE is more of a GSM upgrade, that Verizon may actually be better positioned than AT&T to handle the LTE rollout because FiOS uses all fiber. Is there any truth to this?

    • Stacey Higginbotham

      Rob, we’ve reported on VZ using its fiber for LTE backhaul and even renting it out to other carriers: http://gigaom.com/2009/03/26/verizon-rents-out-its-fiber-for-lte-backhaul/
      As for being in a better position that AT&T because of FiOS, that’s hard to assess since FiOS isn’t available everywhere that LTE will need to be. Having an all-IP based backhaul for LTE seems to be more relevant than having an all-Fiber backhaul, but I imagine one of our more technically astute commenters can offer more insight.

  5. I think Verizon’s advertising promoting its network is brilliant. No wonder they are the #1 cel phone carrier in the US. I’d love to Verizon as a local option for high speed internet. Charter / AT&T are horrendous not only in customer service but also their billing practices.

  6. What about the fact that an iPhone user typically uses 100x more data per month than a BlackBerry user on a comparable plan. These costs are often overlooked when discussing ARPU figures.

  7. I t also cant hurt that Comcast is doing everything in its powers to screw each and every customer. I am so done with Comcast. If a comcast employee is going to mine my text out this post and contact me via email or twitter, please don’t. I am out of Comcast the minute there is an alternative.