There is some encouraging news for Verizon FiOS, relative to competing against cable and DBS. OneTRAK, a Colorado based market research firm, has released a study highlighting market penetration of FiOS in several Massachusetts markets. They conclude that approximately 60% of FiOS video customers are coming from cable (Comcast and RCN in this case), with the remaining 40% coming from DBS. Verizon gained a total of 11,982 video subscribers from these markets. In the markets where Verizon had marketed FiOS TV for the longest period of time – between six and 10 months – Comcast’s lost anywhere from 7.8% to 13.6% of its customer base. Verizon FiOS had a larger impact on RCN, a Herndon, VA based cable overbuilder, who lost 14.5% of their subscriber base on average. While these results are based on a limited market study, they suggest that FiOS can reduce cable penetration by over 10% in certain markets and have a significant impact on DBS as well.
Several implications can be drawn from this study. For example, it appears that Verizon achieved an overall penetration of 4.5% across all of these communities in less than one year’s time, with a high of 9% penetration in one community. It’s probably safe to assume that Verizon will be able to achieve double digit penetration in many markets within two years. Secondly, much of Verizon’s growth in these markets appears to be coming at the expense of RCN. This suggests that the ‘weakest’ competitor may be vulnerable when faced with ‘national’ competitors who deploy advanced services like FTTH. Lastly, Verizon has to be encouraged by these early results. The key word is early. Time will tell if they can sustain this type of growth in the face of assured competitive responses. For now, they have some ‘ammunition’ to support their controversial and expensive strategy of deploying FTTH.
View OneTRACK’s video blog about these results by clicking on the video image above.
