Verizon's $549 million Calif. investments target Comcast, CLECs
Verizon (NYSE: VZ) said in 2012 it invested over $549 million in its California wireline networks and IT infrastructure with a particular focus on expanding its FiOS data and video service.
As of the end of 2012, fiber to the home (FTTH)-based FiOS services were available to 1.4 million homes and businesses in the state.
Verizon also extended its Quantum Internet higher speed service for consumers and businesses, which includes four tiers: 50/25, 75/35, 150/65 and 300/65 Mbps.
It migrated a total of 200,000 "chronic customers," or those that have had multiple repair calls on their copper-based landline phone service, last year. Verizon's copper-to-fiber migration was accelerated in 2012 by damage caused by Hurricane Sandy in New York and New Jersey
Fran Shammo, CFO and EVP of Verizon, said earlier this month during Deutsche Bank 21st Annual Media, Internet & Telecom Conference that it will convert a total of 300,000 homes to FTTH.
Likewise, Verizon introduced new enhancements for its FiOS TV service, including Flex View and FiOS TV Online. With these new services, the telco said it "added 12 new brands, representing more than 50 channels, including Showtime, FOX, VH1, NFL Network and NFL RedZone."
Verizon's moves in California will help it stay competitive against fellow RBOC AT&T (NYSE: T), which is expanding its U-verse footprint in the state, and cable competitors like Comcast (Nasdaq: CMCSA), which is in the process of expanding its broadband speeds.
FiOS continues to be the saving grace in Verizon's wireline portfolio as the carrier sees declines in DSL and traditional phone service. In Q4 2012 it added 144,000 net new FiOS Internet connections and 134,000 net new FiOS Video connections.
This week Comcast said that it is increasing the speeds of two of its XFINITY Internet speed plans, Blast! and Extreme 50 in California "for no additional cost." It will increase download speeds from 25 Mbps up to 50 Mbps and upload speeds from up to 4 Mbps to up to 10 Mbps, while Extreme 50 customers will receive download speeds up to 105 Mbps (formerly 50 Mbps) and upload speeds up to 20 Mbps (formerly 15 Mbps). Meanwhile it is increasing the speeds of its Performance plan up to 20 or 25 Mbps from 15 Mbps downstream and to 4 or 5 Mbps from 2 Mbps upstream.
What's compelling about Comcast's new speeds is that existing customers can get them by simply restarting their cable modems.
On a slightly smaller scale, Verizon will also have to battle Sonic.net, a competitive provider that launched a 1 Gbps offering last June in addition to a new ADSL2+ bundle in Los Angeles. Although Sonic's FTTH service only reaches 700 customers, they are playing in similar markets.
While California is only one market, these moves by two of the largest broadband providers illustrate that the quest to differentiate with higher speeds is a continual battle taking place between cable operators and telcos that are trying to retain their customer base.
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