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Content Tagged with vz + Verizon
AT&T: Wireless Grows, Broadband Blows
In its second-quarter earnings call this morning, AT&T highlighted the awesome growth of its wireless business, which surged 14.8 percent to $11 billion and accounted for roughly a third of its $30.9 billion in revenue for the period. The company also said that the 3G iPhone was selling twice as fast as the first one, which given the price cut, isn’t too surprising.
Equally unsurprising was the 10 percent rise in the number of smartphone subscribers over the second quarter of 2007 (AT&T is the sole carrier of the iPhone in the U.S.). And those users are surfing the web, pushing AT&T’s data revenue up 52 percent from the same period a year ago, to $2.5 billion. After adding 1.3 million wireless subscribers during the quarter, AT&T is still the largest cell phone carrier with 72.9 million subscribers. However, Verizon said yesterday it had added 1.5 million subscribers, so the iPhone exclusivity can only do so much.
The tethered world was a little less rosy, however. AT&T did add 170,000 new U-verse subscribers, bringing that total to 549,000; it also reiterated its goal of having a million subscribers by year-end. But triple-play services were down and broadband growth is slowing. Subscribers to voice, data and TV fell to 48.4 million from 49.5 million at the end of the second quarter of 2007. And AT&T’s total broadband connections now number 14.7 million, up 1.4 million over the same quarter last year but a mere 46,000 higher than the first quarter of the year.
Verizon Helps Turn Consumers Into Geeks
As the average consumer embraces ever more complex technology, Verizon is offering a series of classes beginning in New York City to show consumers what their PDAs and smartphones can do for them. I’m sure many of our readers aren’t in need of such a class — which will teach users all about texting, syncing music and emails — but it’s a great idea.
I hated my BlackBerry Pearl when I first got it; it took what felt like forever to figure out how it was supposed to work. If done well, teaching people like me to use their phones should increase data revenue and overall ARPU for Verizon. If done well, it will also make committed smartphone users out of most participants. And luring people into the store and to teach them the “Verizon way,” means consumers are likely to pick up a few high-margin accessories to bolster their education.
People in the technology field know that poor usability and device complexity hurts customer satisfaction, but keep cramming more features into them. As consumers, rather than enterprises, buy more devices and drive technology adoption, usability needs to improve, or else vendors such as Best Buy with their Geek Squad or Verizon with its classes will take up the slack. At that point, consumers are more likely to heed the advice of their favorite Geek rather than the glossy ads of an OEM when looking for their next purchase.
Verizon’s Crazy Broadband Strigl Theory
Verizon President and Chief Operating Officer Dennis Strigl made a big splash at NXTcomm 08 yesterday when he announced that the entire Verizon FiOS footprint could now get speeds of 50 megabits per second. Typically such bandwidth news wouldn’t cause that much of a furor, but there wasn’t much to write home about from the show, which was held in Las Vegas this week.
In his speech, Strigl pointed out that the U.S. has the highest number of broadband users when compared with other countries, in particular that broadband is available in every U.S. zip code. Good point — and one that I’ve made in the past myself — except that it’s no longer true. By that metric, China now leads. Yes, the FCC used to defined broadband as a service that offered, at a minimum, 200 kbps downloads, but it’s since changed that requirement to 768 kbps.
But where Strigl went too far was when he suggested that three-quarters of American households have two providers to choose from — aka a duopoly, which is not my idea of a competitive marketplace. If you factor in wireless and satellite, he said, there are actually six or seven competitors. Talk about twisting the facts to fit one version of the truth! This part of his speech, however, had me choking on my breakfast cereal.
“Massachusetts and New Jersey have similar population density to Korea and Japan and similar broadband penetration. Unlike other countries, what we have accomplished has come not through [government] policy but through private investment.
How telling. So subverting government policy via lobbyists and highly biased friends at the FCC to ensure a future monopoly is all part of good, capitalistic, private investment theory? Maybe Harvard can include that in its future MBA curriculum.
Regardless, I thought it would be fun to see how Massachusetts and New Jersey really square up against South Korea and Japan when it comes to the price of a broadband connection:
Average broadband speeds in South Korea and Japan are 49.5 megabits per second and 63.6 megabits per second, respectively. The average U.S. speed is about 4.9 megabits per second, making it the 14th-fastest country in the world. The average price in South Korea and Japan is about 83 cents per megabit. In the U.S, it’s about $2.83.
But since it would be unfair to use average U.S. stats, I went with Verizon’s prices, the ones it’s going to offer in Massachusetts and New Jersey. On Verizon’s FiOS network, a 50 Mbps connection costs $140 a month — or about $2.80 a megabit. In fact, if you went with Verizon’s 20 Mbps service, you would be paying $3.25 per megabit. (To be fair, Verizon’s price-per-megabit is still cheaper than the $5.25 Qwest charges for its 20 Mbps connection, which costs $105 a month.)
In other words, not until Verizon starts selling a 50 Mbps connection for $41.50 a month and 20 Mbps fiber connection for $16.60 a month can Strigl get away with comparing U.S. broadband with that of the rest of the world.
Verizon DSL Sales Are Stagnating
Verizon reported its first-quarter earnings this morning, with most things going as expected. Wireless is booming (1.5 million net additions, 13 percent revenue growth), FiOS TV’s demand seems to be picking up (263,000 new subscribers, putting the total at 1.2 million), and not surprisingly, the company saw accelerated decline in the number of wireline customers. During the quarter, the company lost 762,000 residential lines and about 186,000 lines.
In other words, there is a renewed urgency around FiOS offerings. The fiber broadband and TV offerings can help overcome some of the line losses. During the quarter, the company added 266,000 new broadband connections — 262,000 of which came from FiOS Internet service. The company had a total of 8.5 million connections: 6.7 million DSL-based Verizon High Speed Internet connections and 1.8 million FiOS Internet connections.
What that means is that Verizon’s DSL growth is all but over. At the end of 2007, the company had 8.2 million subscribers. Of the 300,000 new subscribers Verizon added in the first quarter of 2008, 262,000 are FiOS fiber subscribers. That leaves 38,000 DSL subscribers — or roughly 12,600 new additions per month. At present, FiOS Internet is available for sale to 7.9 million premises. Penetration for the service averaged 22.9 percent across all markets.
Verizon, like many other carriers, is in a race against time: It is critical for the phone companies to keep people talking on their lines if they want to sell them broadband and video services in the future.
10 Things You Need to Know About LTE
Since everybody likes lists, here are the 10 things you need to know about the 4G technology known as Long-Term Evolution, or LTE, standard.
- It began in 2004 as the next-generation networking technology pushed by the 3GPP
- It’s fast — with peak data rates of 1o0 Mbps down and 50 Mbps up
- It makes CDMA and GSM debates moot
- It offers both FDD and TDD duplexing, which means the upload and download speeds don’t have to be synchronous, so operators can better optimize their networks to use more upload channels
- It won’t be deployed until 2010 or so
- Verizon is testing it with Motorola equipment, and AT&T has backed it too
- LTE will have lower latency, which makes real-time interaction on high band-width applications using mobiles possible
- It competes against WiMax, and some want to subsume WiMax into it
- China Mobile is testing it, which means China may skip 3G networks altogether
- While it will make mobile data faster, it may not bolster sales of networking gear
Verizon’s VoIP Patent Game Continues
Verizon’s VoIP patents have become a lucrative source of income for the second-largest phone company in the U.S. After squeezing out $120 million from Vonage, the company has been filing patent infringement lawsuits against all comers — from tiny startups to cable giants like Cox. Today Verizon went after Charter Communications.
On the flip side, VoIP Inc., an Altamonte Springs, Fla.-based VoIP provider with a questionable business outlook, is almost out of gas. They owe Verizon about $8 million related to the settlement the two companies agreed to last year. As Fierce VoIP points out.
Unless Verizon believes in fairies, this money is as good as gone because the stock price is now at $0.008, creditors are already in the courts for big debts and VoIP Inc. is admitting it expects to have to write off its only real asset, its network business.
Convicted felon Steve Ivester was involved with VoIP Inc. during its early days when it was making a transition from tea company to Vonage competitor. Over the past 12 months, VoIP Inc.’s stock has tanked — from over $8 a share to less than a penny.
Verizon runs into Vermont Regulators
Vermont regulators are giving Verizon’s decision to sell 1.6 million lines in Vermont, Maine and New Hampshire the thumbs down. They are concerned that buyer of these lines, Fairpoint Communications of Charlotte, NC is too small and as a result the service will suffer, according to The Wall Street Journal.
Fairpoint will have to take on about $2.5 billion in debt to make the deal happen, which means there is real risk of quality of service will go down as Fairpoint starts to tighten the belts to pay off the debt. This is particularly bad news for Verizon which is counting on sales of these quasi-rural lines to fund its fiber optic network. The $2.5 billion can be revived if Verizon lowers the price.
This isn’t the last we have heard of Verizon’s problems with the state PSBs, and expect this to become a hot issue in the upcoming election year.
Update: A spokesperson for Verizon emailed me and said that the sale of lines is not for funding the fiber optic network.
We are NOT counting on this money to fund anything, including Fiber deployment. Our debt is very low and our cash flow is high. We have the capex already built into our funding plan. We are selling these lines simply because they are not a strategic fit for us given our broadband plans. Plus, we’ll continue to be heavily invested in Vermont with wireless and enterprise.
Why phone lines - 1.6 million in total - not strategic for a phone company, I don’t get!
AT&T, Verizon…We Are All Open
Ever since Verizon announced that it was going “open,” OPEN has become the new buzzword. For instance, this morning USA Today ran a story on AT&T being open, with extensive commentary from AT&T Wireless CEO & President Ralph de la Vega. The headline, “AT&T flings cellphone network wide open,” made it seem that AT&T was doing something new.
It isn’t a pretty sight to get up in the morning and find such a major development on your beat and not know a thing about it. But after reading through the piece, it was much ado about nothing. After all even today, once your contract expires, you can continue to use the AT&T network on a month-to-month basis. You can use any unlocked device which you can buy from anywhere, as long as it’s a GSM device and supports the frequencies used by AT&T. The phone can use any operating system — Windows Mobile, Symbian, Linux or whatever.
When I spoke with de la Vega following the Google Android announcement , he made precisely the same statements and said that AT&T (T) was already doing what Verizon (VZ) was announcing. He said pretty much the same thing in an interview with Ryan Block of Engadget a few weeks ago. I think the most recent story overstates the case. Just to make sure that I wasn’t missing something, I spoke to an AT&T spokesperson, and basically was told what de la Vega had said previously.
I think the bigger issue here is that we really need to get companies to define what they mean by OPEN. Open handsets, open networks, open applications, open operating systems — some combination of those, or all of them? Otherwise, I might have to start translating OPEN to “We’re Scared of Google.”
Harsh Reality Of Verizon’s Open Network
Consider the recently unveiled “any app, any device” initiative by Verizon Wireless in the context of the company’s latest quarterly results.
The wireless unit of Verizon (VZ) reported year-over-year subscriber growth of 12 percent, but a mere 5 percent rise in voice revenues. Data revenue saved the day, surging 63 percent and lifting the company to 15 percent revenue growth overall. Data revenue per user increased 43 percent, while voice revenue per user declined 5 percent — pushing data to 20 percent of revenues from 14 percent.
The same report revealed a 10 percent decline in residential access lines. The voice business of Verizon Wireless, in other words, seems to have entered the same cycle of contraction suffered by Verizon’s wireline business in recent years. Joining the open access bandwagon promises to keep data revenues growing strongly, but CEO Lowell McAdam faces some mighty difficult choices as the 80:20 ratio of voice to data revenues reverses. The legacy pricing model incorporates price discrimination that will prove awkward to preserve.
Consider the lucrative SMS business of shipping 160 character messages for 10 cents each, or roughly $1,000 per megabyte. What happens when all devices cleanly incorporate instant messaging? “Any app, any device” means VoIP-capable devices that transparently support voice and web browsing via data plans. Why would someone pay Verizon an extra $40 per month for voice services? Any data plan that makes video affordable makes voice essentially free.
Does Verizon really have enough conviction to price without discrimination by application type? McAdam said pricing for the bring-your-own-device crowd will be “competitive” and “usage-based.” Even assuming other carriers follow Verizon’s lead to create competition, does “usage” refer to bit volume or application type?
“Any app, any device” sounds like it eliminates the long list of acceptable use prohibitions associated with existing data plans — quite a change of heart for the company. Verizon only recently settled a lawsuit brought by New York Attorney General Cuomo for terminating the accounts of customers with so-called “unlimited” Internet plans for unwittingly violating the plans through activities such as downloading movies.
It may already be too late for Verizon to back away from the edge. Anything short of a fully open network, neutral to bit type, seems likely to turn the PR love fest into user backlash. In any case, no one expects Verizon to embrace the “faster, cheaper” mantra necessary to fully earn induction into the infocom future.
We can suspend our disbelief until the pricing details arrive in January, but the unintended consequences of the announcement likely represent the best hope for progress. Verizon’s vision of the future may not have changed much. It just gets easier to read the writing on the wall when your back is up against it.
Verizon Boosts FiOS Speeds
Verizon is rolling out major speed boosts for its FiOS broadband subscribers across its entire service area. These new tiers offer up to 50 Mbps/20 Mbps or up to 30 Mbps/15 Mbps, depending on the state in which the service is sold, at costs ranging from $89.95 to $139.95 a month. (I seriously want the 50Mbps connection, but sadly the service isn’t available in San Francisco.)
It has also rolled out symmetrical connections in the entire 16-state region it currently serves. The symmetrical connections have up and down speeds of up to 20 megabits per second. The symmetrical services were first launched on Oct. 23 in the New York Tri-State Region. Today, Verizon (VZ) launched the service in the remaining 13 states.
In Florida, Massachusetts and Rhode Island, offers the option of a FiOS Internet service with downstream and upstream connections of up to 20 Mbps. In California, Delaware, Indiana, Maryland, New Hampshire, Pennsylvania, Oregon, Texas, Virginia and Washington, the company has added a new FiOS Internet service with downstream and upstream connections of up to 15 Mbps.
These services start at $64.99 a month. More details are here.
Why Wall Street Hates Comcast?
Slower subscriber growth, worries about competition from phone companies and a management crazy enough to make a bold move — all this has Wall Street worried about Comcast (CMCSA), the Philadelphia-based broadband and cable provider.
The Nervous Nellies of Manhattan’s nether regions have pushed the stock down almost 30 percent so far this year. Of course, these very same worrywarts were sweating about Verizon’s (VZ) bold bet on fiber to the home technologies.
The divergent fortunes of Verizon and Comcast are very clearly reflected in this chart.
Verizon has done a better job of winning the hearts and minds of Wall Street, and that is why Comcast stock is moving south, while Verizon stock keeps moving up. Never mind the fact that Comcast has a much bigger footprint compared to say, Verizon. That said, one can’t deny that Comcast has challenges, and Verizon FiOS is not to be taken lightly. Here are some of the issues facing Comcast.
- More HD channels to compete with satellite broadcasters.
- Show that it can offer even higher-speed broadband connections, not just talk about it.
- Make its web services strategy pay off.
- Overcome the “managed” traffic scandal.
- Better Customer Service. Again, Better Customer Service.
Even with those issues, Comcast can put its rivals on the defensive by making a few aggressive moves.
- Get more people signed up to its phone service, and if that means discounts. It is a move that hits at the heart of phone companies’ core money machine: voice.
- Get serious about wireless — both cellular and WiFi. Connections everywhere will help the company get sticky with its customers.
- Boost speeds to 20 megabits and lower prices.
- Offer $15 a month broadband plan for a basic, 3-megabits-per-second broadband connection. This will take pricing power away from their phone company rivals.
- Bring to market a very compelling online video offering.
- CEO Brian Roberts should make a public pledge for better customer service, and start with making TiVo-powered Comcast DVRs available everywhere, especially in downtown San Francisco. ;-)
Ignore Wall Street is the final thing I wanted to say — but it looks like management knows that all too well.
“Our job is to keep our heads down and continue to put good operating results on the board,” said Steve Burke, chief operating officer of Comcast, in an interview (with the Wall Street Journal). “If we continue to do that the stock will take care of itself.”
AT&T Changes its ‘Terms of Service’
[Update: AT&T Statement Text] Remember the brouhaha about AT&T (T) and Verizon (VZ) and the awkward language in their user agreements that prevented people from among other things criticize them. (As Bill Maher says, I kid the phone companies.) AT&T, seems to have taken the feedback from blogs and is changing the language of its terms of service. An AT&T spokesperson emailed us with the following statement.
We are revising the terms of service to clarify our intent. The language in question will be revised to reflect AT&T’s respect for our customers’ right to express opinions and concerns over any matter they wish. And we will make clear that we do not terminate service because a customer expresses their opinion about AT&T. STATEMENT ON UPDATE TO AT&T INTERNET TERMS OF SERVICE “AT&T will clarify the language in its Internet Terms of Service agreements to reiterate the company’s commitment to freedom of speech and open dialogue…whether that be via the Internet or elsewhere on the AT&T network. AT&T’s Terms of Service follow the company’s longstanding respect for our customers’ freedom of speech, and clarifies that we will not terminate or suspend a customers’ Internet access service based upon their political views or criticism of AT&T. Our Terms of Service and Acceptable Use Policy are designed to protect our customers, the public, and our network and the facilities used to provide service. As a responsible corporate citizen, we will review any complaints surrounding material that’s in violation of the law, compromises our network, or is abusive or otherwise threatening to the safety of any individual or group. Specifically, the adjusted language will read: 5.1 Suspension/Termination. AT&T respects freedom of expression and believes it is a foundation of our free society to express differing points of view. AT&T will not terminate, disconnect or suspend service because of the views you or we express on public policy matters, political issues or political campaigns. However, AT&T may immediately terminate or suspend all or a portion of your Service, any Member ID, electronic mail address, IP address, Universal Resource Locator or domain name used by you, without notice, for conduct that AT&T believes (a) violates the Acceptable Use Policy; or (b) constitutes a violation of any law, regulation or tariff (including, without limitation, copyright and intellectual property laws) or a violation of these TOS, or any applicable policies or guidelines. Your Service may be suspended or terminated if your payment is past due and such condition continues un-remedied for thirty (30) days. Termination or suspension by AT&T of Service also constitutes termination or suspension (as applicable) of your license to use any Software. AT&T may also terminate or suspend your Service if you provide false or inaccurate information that is required for the provision of Service or is necessary to allow AT&T to bill you for Service. We feel that the clarifying language better reflects our actual long-held policy, which respects AT&T’s customers’ rights to freely voice their opinions and concerns. In addition, we are in the process of reviewing our entire Terms of Service to ensure it reflects AT&T’s ongoing and unblemished commitment to freedom of expression as outlined in the language above. Our customers are our highest priority and we regret any confusion this may have caused.”