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Marianne Paskowski



Verizon’s FiOS TV Enjoys Growth Spurt

June 20, 2007 12:27 PM

Much to the chagrin of cable operators, Verizon’s FiOS digital video service is picking up steam. At a conference in Chicago today the telco’s chairman, Ivan Seidenberg, said it has nearly half a million subscribers since its launch just 20 months ago.

When you think about it, that’s currently the size of a small cable MSO. Seidenberg says it will be available to 9 million homes by year’s end. Right now the service is available in 3 million homes, and with nearly half a million people already signing on, you have to acknowledge that it is indeed an impressive take rate.

And if those take rates prevail, by year’s end it could be as large, or larger, than some of the top 20 cable MSO’s. That should be an alarming wakeup call to cable because this competitor is rapidly gaining subs, probably winning them from cable. What can cable do to stymie Verizon’s growth? Nothing.

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Comments (14)

Cliff :

Cable doesn't have to worry too much because if you check blogs and computer rags you will see articles like this:
http://www.networkworld.com/columnists/2007/053107-buzz.html

FIOS stinks so far. Maybe in another year they will have their support and systems in place provide continuous service for more than 50% of their customers.

I think customers are just bouncing around since many of these cable services have problems too.

What ever happened to customer focus?

Marianne Paskowski:

Hey Cliff,
Thanks for tat link, note to other readers, worth checking out especially if you run cable systems and want a little propaganda to keep your customers out of Verizon's clutches.(Cliff does not.)

FiOS is not even 20 months old from where that dude is writing from. So Verizon, like cable 20 years ago is in shakedown mode.

Still, four outages in such a short time span is not acceptable. And it shouldn't be hard for Verizon to isolate the problem for any given home, given that each is on its own node and does't share a node with other homes in the 'hood like cable.

I hear the install is a bear, can take up to 8 hours. Having said that, Verizon, customer-service wise threw this guy a bone, but not the steak.

Still, I think competition is good. Keeps everything real and lowers prices

Marianne

Jeff Mulligan:

Marianne,

Are you giving up your usually trenchant comment and advice, stating that cable can do "nothing" to combat FIOS? You give in too easily, without even reporting what the possible reasons are for FIOS growth.

No doubt heavy FIOS marketing has a lot to do with it, abetted by a wimpy marketing response from those legendarily clueless MSOs. Look at the comparative advertising volume and you'll see reasons, I'm sure, why FIOS ad weight and Verizon's fresh pitch to consumers can pick the low-hanging fruit of disaffected cable subscribers and hold-out non-subscribers.

But don't expect FIOS to keep growing at the same rate, particularly if cable operators wake up and recognize they can't simply denegrate DSL and call it a day.

Jeff

Marianne Paskowski:

Jeff,

You just cannot generalize here. In some markets, FiOS priced its service attractively to lure cable subs to switch. But all things given, FiOS and cable are pretty much on par, price wise. Where FiOS is more established, like Long Island, that's a battleground.

And that's where the consumer benefits, with more attractive pricing options.

Marianne

Gonzoguy:

The phenomenon we're witnessing, FIOS eating cable's lunch, is a predictable dynamic in the marketplace, particularly in technology markets where a new entrant can challenge established players whose customer base inevitably includes large number of "switchables" attracted to a "new thing." A short-term spurt for a new service receiving heavy introduction marketing and promotions will always occur when a new technology challenges an established technology.

However, cable does not seem to be suffering the famed Innovator's Dilemma in which an upstart discontinuous technology undercuts the established leader's price even though providing "acceptable but nothing special" performance. That, history tells us, would be disastrous for cable.

Instead, FIOS and cable appear to consumers to provide the same benefits--FIOS is a continuous technology--at comparable cost. So it's a head-to-head fair fight with marketing muscle winning out. Who's outspending whom? I suspect that cable needs to market much more, both in GRPs and in overcoming the shopworn "cable guy" image.

Marianne Paskowski:

Hi Gonzoguy,

You nailed it. Cable has never been able to shed its "Darth Vader" image. I'm not so sure customers feel warm and fuzzy about Verizon, but it is a trusted phone company. How they play in the TV space is a jump ball.

Marianne

Cruiser:

Yo, Blondie --

Maybe you're right. Cable can't do jack to fight FIOS.

What do customers think? You have the cable company with ever-higher rates and confusing tiers and BS excuses when the service goes out. Dish is even worse when it rains or snows.

On the other hand, Verizon FIOS basks in the warm glow of POTS (plain old telephone service). Reliable. Rarely down except when the wires go down. The friendly operator at the end of the line (remembered if not lovingly replaced by automated systems). The company you could always trust because, truth be told, you had nowhere else to go for phone service.

Verizon and the other phone companies are, of course, the same kind of lobbyist-heavy, public-be-damned snakes they always were, and cable has become. But the average Joe doesn't think so.

So I'm selling my Cox, Comcast and Cablevision stock, buying lots of T and Verizon--and plenty of DVDs for when everyone's service fails.

Cruisin not bruisin

Marianne Paskowski:

Oy, Cruiser,

You won't be able to play your DVD's if the juice is gone, storm, rodents eating the wires, whatever. But I do agree with you there is a certain comfort zone with a phone company, vs. a cable company. And that's what MSO's need to address. Where is CTAM, the cable marketing arm--not lobbyists-- on this issue? I don't know.

Marianne

Bob:

FIOS is a great advance, but it is just the tip of the iceberg for consumer's fight against mediocre and price-inflated cable service. Deregulation of set-top boxes is another key development and a move toward more tiered pricing packages (not necessarily a la carte) will help too.
Right now, I pay $49 for advanced cable, $12 for a sports and family package, $8 for HD, $12 for a DVR and $2 for a cable card that provides absolutedly no functionality. All told, it adds up to $84 a month for service wtih NO premium channels.
Cable customers have been taken for granted and abused for years. As the recent U of Michigan customer satisfaction study shows, rates are up another 6% in 2006 (94% for the last decade) and net revenue up 175% for Comcast, while satisfaction levels are at an all-time low. Give me a choice of another, just let me dump my cable company.

Marianne Paskowski:

Bob,

Saw that study too. Do you live in an area that Verizon is building? I don't, but the telco can't get here fast enough for me. Conversely everyone I know who has satellite is quite satisfied. Where I live, just about nobody has it because of hurricanes and Nor'easters.

Marianne

Christine Daly:

I can't wait for Fios to get to my town. I opened up the Feb 2008 issue of Consumer reports and see that Fios has the highest rated telephone service, highest rated cable service, and highest rated internet service. Hurry up already and get to my town!

Marianne Paskowski:

Christine,
Thanks for sharing about FiOs Consumer Reports rankings. I'm not surprised. Hear mostly good. Verizon will never come where I live, alas, small population, over the bridge on Cape Cod.

Thanks for your post,
Marianne

RaiulBaztepo:

Hello!
Very Interesting post! Thank you for such interesting resource!
PS: Sorry for my bad english, I'v just started to learn this language ;)
See you!
Your, Raiul Baztepo

Hello ! ;)
I am Piter Kokoniz. oOnly want to tell, that your posts are really interesting
And want to ask you: is this blog your hobby?
Sorry for my bad english:)
Thank you!
Your Piter Kokoniz, from Latvia

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