Verizon last week divulged more detailed statistics on its FiOS fiber-to-the-premises network rebuild, focusing in particular on how well the telco is faring with its video-over-fiber FiOS TV service. I deconstructed some of the key pieces of data — Verizon produced Q3 06 and projected Q4 06 and Q4 10 estimates, but not much else — to figure out all the in-between time periods.
Taking some of these key benchmarks, I developed a model for how Verizon might get from here (Q3 06) to there (Q4 10). Verizon has said that it plans to serve three to four million video subscribers by year-end 2010 from a starting point of around 100,000 as of 9/30/06.
Assuming relatively smooth quarterly growth in both the number of homes capable of receiving Verizon FiOS TV service and a steady quarterly uptick in penetration (penetration for Verizon FiOS TV has grown from 1% in Q4 05 to 7% today and the company expects it rise further to 10% by year-end 2006), it’s clear that Verizon can easily make its 2010 target. Although it’s not readily discernable from the table below (which was condensed for web viewing), Verizon could break the one-million FiOS TV threshold sometime in Q2 08.
Verizon’s big success story is its FiOS high-speed data service, which should make its million-customer milestone sometime in Q2 07, up from 500K at the end of Q3 06 and a projected 725K by the end of Q4 06. By the end of Q4 07, FiOS high-speed service could pass the 20% penetration threshold.
Still, Verizon’s reach across the U.S. is limited to geographic pockets, although some of them are admittedly huge and lucrative, such as the one running up the Northeast U.S. seaboard. No matter what success Verizon has with FiOS, the competitive impact will be therefore limited by geography.
Although cable operators are likely to feel the sting of losing, or not gaining, three to four million video subscribers (only about one-eighth the number of video customers Comcast has today, btw), the high-speed sub. competition posed by FiOS could hurt worse.
High-speed customers are very high-margin subscribers for cable operators, entailing no programming fees and far fewer and simpler marketing expenses. In other words, high-speed revenues represent a lot of gravy to cable companies, not to mention the voice upsell opportunities high-speed service provides.
Cynthia Brumfield at 9:47 PM|Comments(0)
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