Verizon is raising the price of the company’s FiOS service in many markets so the price of basic triple play bundle that consists of TV, Internet and phone now climbs at US$109 from US$99.
At the same time, the price of its step-up bundle which has faster Internet service and more channels, steps up by US$10 to US$119 and that of the most expensive bundle drops to US$129 from US$139 but now it includes Showtime instead of HBO and a horde of other movie channels.
In New York City and its surrounding areas, the basic price climbs to US$99 from US$94, and the step-up price rises to US$109 from US$99. Besides, the company is raising Internet speeds for all these packages fairly sharply. Current customers keep their existing prices and Internet speeds until their contracts terminate.
But it seems that Verizon does intend not to mention about its price hikes, and in avideo press conference on Monday it said about the faster Internet speeds as well as new promotions and new local TV news channels for Long Island and northern New Jersey. Still, it did not cite price increases.
Technical specifications and features are interesting to talk about, but it is worth to remember that the most important metric for any telecommunications firm is average revenue per user (APRU), and a great deal of what executives do is try to come up with products and promotions to get customers to spend more each month.
Verizon is working on other features that will bring Internet services like social networks onto television sets and also take pay-per-view movies, purchased on the set top boxes, onto computers and cellphones, he said.
It is raising prices when all the operators are heavily marketing triple-play bundles. In the New York area, Time Warner Cable and Cablevision are both trying to attract customers with US$90 plans for the first year. Comcast, which competes against FiOS in much of the Northeast, is promoting a US$99 introductory bundle that includes HBO and US$200 cash back.
Indeed, these bundles are offered with one or two-year introductory rates. The companies are much less clear about what customers’ rates will be when the initial deals expire. Essentially, they hope that customers don’t notice a big jump in their bills, but they are prepared to negotiate if needed to keep people’s business.
It makes economic sense for Verizon to try to compete more aggressively in the premium end of the video and Internet market. Cable companies, with larger video customer bases, have lower costs and thus can better compete on price. FiOS, while expensive for Verizon to build, has higher capacity. So it’s easier for it to add Internet speed and high-definition channels to its higher-end packages.
The easiest place to make that case is Internet speed. Verizon’s basic tier for FiOS will now offer 15 megabits per second for downloads and 5 Mbps for uploads. In industry shorthand, that’s referred to as 15/5 service. FiOS’s previous offering started with 10/2 service. Purchased outside the video bundle, the faster base offering, costs the same US$45 a month.
The mid- and high-priced bundles now get 25/15 service, increased from 20/5, but the price for higher speed increases to $65 from $55. In New York City and Long Island, the midtier speed is now 35/20.
These speeds beat what rivals offer at similar price points. In markets with its latest technology, Comcast’s basic offer is 12/2, with an upgrades to 16/2 and 22/5. Cable vision offers 15/2 service with an upgrade to 30/5. Time Warner Cable is slower.
Even Verizon hopes to emphasize upload speed as a point of differentiation because cable technology has less upstream capacity. To emphasize uploads, one of the company’s promotions offers new customers a high-definition Flip video camera, that generates some rather large files people may want to share.
Verizon is not focused on selling 50-Mbps or 100-Mbps service as some cable companies are for $89 a month and up, which is simply too much money for mainstream customers, particularly when people don’t know what to do with that much speed.
Verizon, rather, is looking to create new services, such as high-definition teleconferencing, that it can package in with higher speed services.
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