Verizon (NYSE: VZ) has yet to jump on the 1 Gbps fiber-to-the premises (FTTP) bandwagon by adding it as a speed option in its FiOS Internet service suite, but it can get there if it sees a demand for that speed.
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Shammo |
Speaking at the Wells Fargo 2014 Tech, Media & Telecom Conference, Fran Shammo, EVP and CFO of Verizon, said that the company has put in the network infrastructure to support 1 Gbps, but he does not see a market for it today.
"We're now offering 500 Mbps in the home and you could take it to a Gig even though there's no application today that would ever need a Gig in the home," Shammo said.
But even with speeds that range from 15 Mbps to 500 Mbps, the service provider is seeing more of its younger generation customers, otherwise known as "millennials," purchase broadband as a standalone service.
In the New York City market, Verizon conducted a program where it allowed potential users to pick more TV stations or higher speeds, and the study found that they wanted the higher speeds to view video and connect to social media sites like Facebook.
"If you look at millennials in New York City, we did this trial where they could pick whether they wanted more TV stations and obviously they chose speed because they want the highest speed that they can get," Shammo said. "They are viewing their content through the broadband connection and don't have linear TV connections."
Besides upping the overall speeds, Verizon also upgraded almost 5 million FiOS to the symmetrical "SpeedMatch" program it launched for consumers in July and later in September for its SMB customers. SpeedMatch should resonate as a competitive force against cable operators whose upstream network capacity on their hybrid fiber coax (HFC) networks is limited.
The telco is also enhancing the in-home experience with the launch of its FiOS Quantum Gateway device, which it claims can deliver up to 800 Mbps of Wi-Fi capacity in a home. It also released its video media server earlier this year that will allow users to use one device to distribute video streams throughout the home.
"The video media server really helps with capex because you can put one piece of equipment in your home and that will become wireless in 2015," Shammo said. "Now, I don't even need to deal with the inside wiring in your house so it becomes very efficient for us to deliver that to the customer."
Shammo added that from a "customer standpoint there will be other features that come with that Video Media Server that aren't available on a set-top box today."
However compelling these new offers are, the service provider's unwillingness to bring FiOS to new markets means that overall growth of its FTTP services is starting to level off, particularly in its established markets.
While it did add 162,000 net new FiOS Internet connections and 114,000 net new FiOS Video connections during the third quarter, overall customer additions were down 6 percent and 16 percent, respectively, from the same period a year ago.
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Editor's Corner: Verizon's FiOS growth continues to level off as market penetration matures
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