Verizon Upgrades to 750-MHz Internet Access, "Everywhere" FiOS is Available

There is no such thing as “sustainable advantage” in the broad access business. Consider that
Verizon finally will be upgrading its fixed network internet access speed to symmetrical 750-Mbps service, offering what will be seen by some as an important marketing advantage against cable TV operators, Verizon’s primary competition.

Cable TV operators, the leading U.S. internet service providers, cannot, at present offer such symmetrical speeds, so several segments of the customer base will see clear advantage for the new Verizon offers.

You might argue that the primary value will be for consumers with high uploading requirements. But the biggest single segment of the audience are consumers who want a triple-play bundle (or even an “internet-plus-linear video” bundle and are willing to add fixed network voice if it doesn’t cost much) for a reasonable price.

Priced for consumers at $149.99 a month for standalone service and $169.99 a month for a triple-play bundle with TV and landline phone voice service, the packaging likely creates a new way of establishing value.

The price differential between internet-only service and the triple-play bundle is just $20 a month. Without question, the triple-play bundle offers much higher value, compared to buying 750-Mbps on a stand alone basis.

To be sure, consumers will be evaluating the new offer carefully, as Verizon currently is running a triple play offer including symmetrical internet access at 150 Mbps, TV, and home phone all for $80 a month for the first year, with or without contract. Contract customers pay $85 a month for the second year.

Verizon also sells a $50 a month double play including local TV and symmetrical 50 Mbps  internet. Some would argue that those price points and included services represent a rather-significant amount of value for the price.

By way of contrast, it is easy to pay $80 or more per month to buy a single service such as DirecTV, or $130 for a dual-play asymmetrical internet package with downstream speeds of 100 Mbps. For perhaps $150 a month a consumer can buy a triple-play package (asymmetrical internet) with reasonable speeds.

Initially, the symmetrical 750-Mbps service will be available to about seven million Verizon customers in greater New York City, northern New Jersey, Philadelphia and Richmond, with more markets to follow in 2017, Verizon says.

For a firm that always touted the superiority of its network, the emergence of gigabit offers from Comcast, Google Fiber, AT&T and other independent ISPs is a challenge, as those offers undermine Verizon’s “best network” positioning. So it always was inevitable that Verizon would change its offers.

Now the issue is how the new offer encourages new customers to buy Verizon services, and what percentage of existing customers will see the top-end offer as worth buying.
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