Verizon Achieves $129 ARPU for FiOS

Bernie — Tue, 29 Apr 2008 19:32:28 -0400

Verizon released their 2008 first quarter earnings this week. Among the details, the report demonstrates that wireless and FiOS are driving growth, and traditional wireline is not. No huge revelations there. AT&T reported similar results, highlighting wireless and broadband as growth engines. Verizon is seeing decent results with FiOS (although probably not quickly enough for some investors), and the FTTH detractors noise is certainly less deafening. Key results include a $129/month ARPU rate for FiOS customers (more on that below), and:

$23.8 billion in revenues, up 5.5%; $4.3 billion in operating income, up 14.1%
1.5 million net wireless customer additions; 67.2 million total customers; 65.2 million retail customers, up 11.5%
1.19% total wireless churn and 0.93% retail post-paid churn
13.2% increase in total wireless revenues; wireless data revenues up 48.9%
263,000 net new FiOS TV customers and 262,000 net new FiOS Internet customers, for a total of 1.2 million FiOS TV customers and 1.8 million FiOS Internet customers; 8.5 million total broadband customers, up 14.9%
More than $1 billion in consumer and small-business broadband and video revenues
9.6% increase in consumer ARPU in legacy telecom markets

Early indications are that the FTTH strategy with FiOS is working. For example, FiOS customer ARPU was $129/month, compared with $61/month for legacy wireline customers. That metric indicates that FiOS customers are subscribing to more services, due in large part to FiOS’ ability to deliver more robust revenue generating services. Probably more importantly, Comcast reports on its last available quarterly report that total ARPU for their subscribers was $104/month. That difference in ARPU is one reason why some are suggesting that it’s just a matter of time before cable operators are compelled to go FTTH as well. Light Reading offers some insight into that debate, where some analysts argue that FTTH makes operational and competitive sense for cable companies. There is mounting evidence to support that with Verizon’s latest quarterly data.

On a side note, Verizon and New York city have agreed to terms for a citywide cable franchise agreement. Looks like they’ll be providing some headaches to Cablevision and Time Warner Cable. To be fair, Cablevision has stood up to Verizon’s competitive challenge in other territories, and has proven they are more than able to meet the challenge.

Wall Street’s Take on Telecom Competition

Bernie — Thu, 11 Oct 2007 09:23:02 -0400

Wall Street analysts predicted several years ago that cable companies would have first mover advantage with triple play bundles, but within a few years telcos would battle back. It looks like a pretty accurate prediction. Cable companies like Cox, Comcast and Cablevision have executed their triple play strategy quite well and amassed a solid triple play subscriber base. As a result they have higher ARPU rates and have managed to continue double digit revenue growth over the past few years, despite the fact that cable penetration in the U.S. is reaching maximum penetration. The tide may be shifting. As predicted, telcos are now flexing their triple play muscle, and companies like Verizon and AT&T are stemming the loss of revenue associated with wireline losses with their own triple play bundles. Businessweek features an article written by Richard Siderman of Standard and Poors which sheds light on how Wall Street views this pitched competitive battle.