Is FiOS a Different Product?

Verizon says it has 8.2 million broadband access subscribers. During the fourth quarter, Verizon added 245,000 net new FiOS Internet customers and 19,000 net DSL subscribers. So here's the question: is T1 (1.54 Mbps) a different product from a DS3 (45 Mbps) connection? Is T1 a different product from an asymmetrical cable modem or Digital Subscriber Line service? I suspect most people who create and deliver such services would say "yes."

So if a customer buys a FiOS fiber to home service, is that a different product than the alternative it replaces? If Verizon added just 19,000 DSL subs and an order of magnitude more FiOS subs, what does that suggest? Right now it is hard to tell what it means, as Verizon does not appear to be providing detail on DSL penetration as distinct from FiOS Internet.

So far, Verizon says it has 21 percent FiOS Internet penetration where it can sell the service.
Presumably that includes virtually all of the DSL subs who converted over to FiOS. At the end of March 2007 Verizon said it had overall broadband penetration of about 16.8 percent.

So it is conceivable that FiOS availability boosts broadband access penetration by something slightly less than four percent of marketable homes, as well as garnering 16 percent of homes as video subscribers.

For the moment, FiOS Internet appears largely to be a substitute for DSL. That should change over time, as nearly all major market consumers in Verizon's footprint have a chance to buy Ethernet services ranging from 10 to 50 Mbps. It's hard to imagine that not emerging as a differentiated product.