Verizon (NYSE: VZ) plans to complement its growing set of higher Quantum FiOS Internet speeds with a new Wi-Fi router that will support the multiple wireless devices consumers are using in their homes to access the Internet and other content.
Fran Shammo, CFO and executive vice president for Verizon, revealed those plans to investors during the Jefferies 2014 Global Technology, Media and Telecom Conference. Set to debut this summer, the new router will support up to 300 Mbps of Wi-Fi capacity in the home. He did not detail pricing or how it will be sold to existing and new FiOS customers.
"We think that the broadband product has maybe separated us from our competition so we have continued to increase the speeds," Shammo said. "Come mid-summer we are going to come out with a new proprietary router that will get you to 300 Mbps of Wi-Fi speed in your home so we believe that could be a nice differentiator for us as well."
In addition to the new router, Verizon is going to release a video media server. What's significant about the media server is that it marks another move the telco is making towards offering its residential customers all IP-based services.
One of the key attractions of the media server is that FiOS customers won't have to place a set-top box in each room of their house where they want to watch video. "The real benefit for the customer is that you have one piece of equipment in your home," he said.
He added that consumers will be able to connect TVs that are not IP capable to the media server via an additional attachment.
Other benefits afforded by the media server will be greater capacity to run multiple digital video recorders (DVRs) over multiple TVs. "There are a lot of features that come with that media server that can't be handled in a set-top box," Shammo said.
For Verizon, the benefit is twofold: shorter installation times and reduced CPE costs, particularly for single family homes.
"All I have to do is connect that media server up to our ONT, light it up, get the IP technology in the home working and we believe it cuts our install time by about 50 percent," he said. "That's a huge cost benefit for us within the FiOS world."
Despite the attraction these new capabilities will bring to existing customers, they will be of little comfort to customers that reside outside of the FiOS footprint.
"We'll continue to fulfill our FiOS LFAs [license franchise agreements]," he said. "We will complete [the FiOS buildout] with about 19 million homes passed. That will cover about 70 percent of our legacy footprint; 30 percent we're not going to cover."
The remaining 30 percent will continue to be served by its aging copper network that will likely never be upgraded with fiber. "We will continue to harvest that copper network and those customers and keep them as long as we can but we will not be building FiOS out to those areas," Shammo said.
Verizon's plans come after a quarter where its overall FiOS subscriber growth slowed due to what it says were challenging weather conditions and aggressive pricing campaigns from cable operators. During the first quarter of 2014, the telco added 98,000 net new FiOS Internet connections and 57,000 net new FiOS video connections.
In some of its largest markets like Texas, penetration has reached 40-50 percent growth. "Some of our markets are at 40 percent penetration and we have some markets at 50 percent penetration so those markets will slow," Shammo said.
He added that in markets like New York City, which is its fastest growing penetration market, "there's still a lot of growth in the FiOS area."
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