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Updated: If Verizon(s vz) has to visit a copper line customer more than twice to repair the line, the communications company thinks it’s a better idea to just switch the customer over to fiber, said an executive on the company’s annual financial results call Tuesday.
Verizon has sold off much of its landline and DSL business in the last few years, but it still has about 9.9 million copper voice and 3.9 million DSL customers on the books. And while its FiOS expansion isn’t expected to move forward rapidly anymore, on a financial results call Tuesday, Verizon CFO Fran Shammo said the company would embark on a strategic initiative to replace problem copper lines with FiOS for lines that experience “chronic problems.”
On the call, Shammo said: “So what you’re going to see this year is a very strategic initiative, that we go out and we look at areas where there are chronic copper problems and we start to transform them onto our FiOS network. And the math would say if there is a chronic problem that we have to visit more than two times a year, the actual financial benefit of us transforming that to FiOS pays for itself within that year.”
His comments make sense, given the high cost of maintaining an aging wireline network as the number of subscribers on that network falls. As Verizon’s loss attributed to pension costs indicate, the cost of labor associated with wireline operations are high, and potentially not worth it given the price customers pay for such service. For example, paying a union technician an hourly wage to go out to repair a line can be expensive, and the customer may not be paying a high monthly rate. Plus, adding FiOS could help Verizon expand its offerings to those customers. For example, the FIOS triple play average revenue per user is more than $148, while the overall consumer ARPU for Verizon is $96.43.
So, why not help Verizon out and give Big Red a call if you think your copper phone line sounds fuzzy or your DSL is getting balky. We’ll see how “strategic” this initiative really is.
Update: So after discussing it with Verizon spokesman Bill Kula, this is less exciting than many of us hoped. I didn’t think Verizon would suddenly lay fiber in areas where it hadn’t so far, but Verizon isn’t even laying fiber near its existing FiOS areas. Shammo is discussing a Verizon plan to offer customers who are already in a FiOS area the chance to move to FIOS. Skeptics among you might point out that those people already have that choice and Verizon sends out mailings to let them know about their choice, but this is slightly different.
Kula confirms that if a copper customer calls in with repeated problems, Verizon will switch them to FiOS without charging an activation fee, and offer that subscriber a “comparable rate plan,” to what they are currently paying for their copper line (presumably those paying copper rates will get copper-like speeds). The goal is about saving money for Verizon, since fiber is more economical than copper to troubleshoot, manage and operate, but it’s also a way to goose penetration in markets where Verizon has FiOS. So, sorry Boston, parts of New York and other areas eagerly hoping for FiOS. Your day hasn’t come yet.