Verizon Opts For Gutsy, Competitive Move
["Also, you can be sure this is going to ratchet up the competition with the cable providers, who aren’t likely to sit still as the RBOCs move into their core video turf. To stay competitive, the cable providers will move more aggressively into voice services, especially discounted ones such as VoIP, which will allow them to price their triple play bundles more competitively. It’s quite likely we’ll see strategic alliances between cable companies and national VoIP providers like Vonage, AT&T and others."]
Jul 26, 2004
By: Al Senia
America's Network Enews
americasnetwork.com
Verizon Communications provided a detailed roadmap last week of where the traditional phone business is headed through two separate, but related, announcements. In what looks like a dead-on assault on the cable companies, Verizon said it would connect homes and business in parts of California, Texas and Florida this summer with fiber optic lines as part of a fiber-to-the-premises service called Fios.
This service will start becoming available within 60 days in select communities, cost between $35 and $50 a month and won’t carry an installation fee, according to a company spokesperson. What’s more, Verizon says it is planning to carry cable television over the Fios network and eventually offer customers in its 29-state area a “triple play” bundle of voice, video and data services. That will place Verizon flush up against cable providers such as Cox Communications and Time-Warner, which already offer similar bundled services in parts of Verizon’s service territory.
Later in the week, Verizon rolled out its new national, consumer VoIP telephone service for its existing DSL network. Called VoiceWing, the new VoIP offering puts Verizon is direct competition with companies such as AT&T and Vonage, who also offer national VoIP phone service. Verizon’s offering will cost about $40 monthly for unlimited local and long-distance calling, with a $5 discount for customers of Verizon online DSL.
Bob Ingalls, president of Verizon’s Retail Markets group, explained during a conference call that customers would be offered more choices and features under VoiceWing, which is being rolled nationally with area codes covering 139 markets in 33 states. (Customers in other non-Verizon service areas can subscribe via the Internet, but the main focus is in Verizon’s own service area). Ingalls added that for the foreseeable future, Verizon won’t provide “naked” DSL - its DSL customers opting for VoiceWing will still be required to have wired lines phone service, which will raise their overall cost - although this might be reconsidered later. Of course, the fact that DSL customers are locked into wireline service has long raised the ire of VoIP pioneers like Vonage’s Jeff Citron. (That policy helps lock Vonage out of the market by requiring DSL customers who opt for VoIP competitors to obtain a new phone number).
Ingalls contended that even when the cost of the wired service is calculated, Verizon’s VoIP phone service is price-competitive. “There are others that are lower, but the quality, support and brand we provide is something people will want to look at,” Ingalls argued. He also says the VoIP service won’t cannibalize existing long-distance voice revenue, which could be wishful thinking.
Still, there’s a sense of inevitability and lots to chew over these two announcements. It’s clear Verizon wants to maintain its lead over the other RBOCs in fiber technology and is delivering on FTTP deployment plans first outlined to Supercomm. At the trade show, executives said Verizon would reach 1 million homes by year’s end with FTTP deployment. Of course, to make its return-on-investment, Verizon must still convince those customers to subscribe to Fios - and, of course, to opt for revenue-enhancing services like video (which won’t be added to the FTTP package until next year).
Also, you can be sure this is going to ratchet up the competition with the cable providers, who aren’t likely to sit still as the RBOCs move into their core video turf. To stay competitive, the cable providers will move more aggressively into voice services, especially discounted ones such as VoIP, which will allow them to price their triple play bundles more competitively. It’s quite likely we’ll see strategic alliances between cable companies and national VoIP providers like Vonage, AT&T and others.
“I give them [Verizon] credit for guts,” says Charlie Golvin, an analyst with Forrester Research. “The vision that broadband is what matters is the right one. Verizon wants to get and keep their broadband customers.” The new VoiceWing service is a good interim step that should satisfy DSL customers who are mulling a jump to cable competitors or other long-distance providers until Fios get deployed during the next five years, he notes. |
