Verizon’s fourth-quarter financial results were consistent with a recent trend: higher reliance on consumer revenues and relatively rapid decline in the small business segment that is accounted for in the “mass markets” category.
That means cable TV providers really are taking market share in the small business market.
In the fourth quarter, where consumer revenue grew 2.6 percent and for the full year grew 3.5 percent, small business revenue declined 5.6 percent in the quarter and 4.6 percent for the full year. So one might conclude there is a possibility that share gains by cable TV providers are accelerating, in Verizon markets.
That noted, be watchful when any firm says its customers are “rightsizing.” That is a euphamism for “spending less.”
Shammo says a “change in the consumer revenue growth trajectory continues as customers right-size their existing bundles and core voice services decline.”
At the same time, high speed access revenue is increasing, while demand for linear video is dropping.
“At the end of the quarter, more than 70 percent of our consumer Fios internet customers subscribe to data speeds of 50 megabits per second or higher, and we have shifted our introductory offers to 50 megabits,” said Shammo. We are also seeing an increasing number of customers opting for higher speeds.”
That noted, Verizon still had higher net additions for linear video than for high speed access. Verizon added 99,000 net FiOS accounts, representing 42 penetration. Net broadband accounts grew just 5,000 in the quarter.
In linear video, Verizon added 20,000 net customers in the quarter and 178,000 for the year, hitting 35 percent penetration.
Those market share figures are worth noting. In any competitive market where two or more competitors are relatively evenly matched, in terms of skill, financial strength, marketing and network quality,
Recall that in a monopoly market, a rational operator could expect to deploy a full network and then get 90 to 95 percent adoption of lead services. That was the case for cable TV and telcos in the “monopoly” era.
Cable TV executives used to quip, off the record, that they enjoyed the best of all possible worlds: an unregulated monopoly. And local telcos once boasted 95 percent or higher market share in voice.
Competitive markets fundamentally change the dynamic. Now, cable TV and telco have to build full networks that actually have stranded asset rates as high as 65 percent.
Verizon’s enterprise business also is declining. Global enterprise revenue declined 3.3 percent, 2.1 percent on a constant currency basis
For the full year, global enterprise revenue declined 5.2 percent, 3.5 percent on a constant currency basis. The global wholesale business declined slightly in the fourth quarter and 3.4 percent for the full year.
Total operating revenues for the fixed segment declined of 0.9 percent in the quarter and down 1.8 percent for the full year.