Verizon issued its Q1 06 earnings results today showing a rise in revenue (normalized to include both Verizon and MCI, which merged with Verizon in early January) but a drop in net income. Revenues rose 3.1% year-over-year to $22.97 billion, while net income dropped 7.1% to $1.6 billion due to increased sales expenses and merger costs.
The revenue up-turn is due to strong growth in high-speed and mobile services, which countered ongoing line losses.
| Verizon Key Stats (in mil.) | 1Q05 | 2Q05 | 3Q05 | 4Q05 | 1Q06 |
| Total access lines | 51.50 | 50.70 | 49.69 | 48.80 | 47.97 |
| Net Access Line Loss | (0.80) | (0.80) | (1.01) | (0.89) | (0.83) |
| DSL Customers | 3.86 | 4.41 | 4.53 | 5.14 | 5.69 |
| Net DSL Adds | 0.38 | 0.28 | 0.39 | 0.61 | 0.54 |
| Verizon Wireless Customers | 45.50 | 47.40 | 49.30 | 51.30 | 53.00 |
| Net Wireless Adds | 1.60 | 1.90 | 1.90 | 2.00 | 1.70 |
Verizon boosted its broadband subscriber count (DSL and fiber-based) by 540,000 net new customers during the quarter, a run-rate 47% higher than the 390,000 net new broadband customers added during the year-ago quarter. Verizon ended Q1 06 with 5.7 million high-speed customers.
Verizon Wireless continued its upward growth trend, with the company adding 1.7 million net new mobile customers during the quarter, a growth figure that tops the 1.6 million net new mobile customers added during Q1 05. By the end of the quareter, Verizon Wireless served 53 million customers.
The really interesting part of Verizon’s news came during the earnings call, when CFO Doreen Tobin shed some light on the company’s FiOS fiber-to-the-home initiative. FiOS currently passes 3.6 million homes, with high-speed service available in 15 states. According to Tobin, after 12 months post-launch, FiOS markets are achieving 17% penetration, more than halfway to the company’s goal of 30% penetration at the five-year mark.
Moreover, penetration is strong in the markets where Verizon has launched FiOS TV. Keller, TX, for example, has achieved a 24% penetration of capable homes in five months since launch.
| FiOS Penetration as of 5/1/06 | ||
| Market | % Share | Months Since Launch |
| Massapequa Park, NY | 6.5% | 3 |
| Herndon, VA | 10.0% | 4 |
| Tempe Terrace, FL | 16.0% | 4 |
| Keller, TX | 24.0% | 5 |
Posted by Cynthia Brumfield at 5:54 PM | Print | Comments (4)
Rep. Ed Markey (D-MA) introduced today a stand-alone net neutrality bill called the Markey Net Neutrality Act of 2006. On the heels of the Commerce Committee’s rejection of comparable language introduced as an amendment to the Barton Bill, Markey is moving this stand-alone measure to hammer home the point that the open network nature of the Internet is in danger.
The stand-alone bill seems to have basically the same provisions as the earlier amendment. In a statement today introducing the bill, Markey said
[I]f we don’t protect the openness of the Internet for entrepreneurial activity, we’re ruining a wonderful model for low barrier entry, innovation, and job creation. Broadband network owners should not be able to determine who can and who cannot offer services over broadband networks or over the Internet.
A companion bill is slated to be introduced in the Senate today.
Posted by Cynthia Brumfield at 2:38 PM | Print | Comments (0)It’s a sure sign that the cable industry in general is on the upswing when one of its weakest companies posts strong quarterly results. St. Louis, MO-based cable company Charter Communications issued its Q1 06 earnings report this morning showing gains virtually across the board, including growth in its basic subscriber count, the first such uptick for Charter in a very long time.
Total revenues advanced 8.1% year-over-year to $1.374 billion. Cash flow, however, dropped by .8% to $471 million due to increased operating expenses — the only less-than-positive result posted by Charter.
Charter actually managed to add 28,500 net new basic subscribers during the quarter, a byproduct, no doubt, of the growing attractiveness of the triple-play bundle offered by the operator. In particular, Charter’s telephony customer count soared by 69,600 during the quarter, reaching a total of 191,000 or 4.9% of the capable homes by quarter’s end.
During Charter’s earnings call, COO Mike Lovett said that two-thirds of the phone customers buy all three services — voice, video and data — and that three-fourths of new phone customers coming on board opt for the triple-play package.
High-speed data growth also surged during the quarter, with Charter gaining 126,000 net new modem subscribers, a run-rate 34% higher than the 94,000 net new high-speed customers added during Q1 05. By quarter’s end, Charter counted 2.3 million total high-speed data customers.
Digital penetration also jumped during the quarter, with the company adding 69,800 net new digital customers, a run-rate 251% higher than the 19,900 net new digital customers added during the year-ago quarter. By quarter’s end, Charter served 2.866 million digital subscribers, representing 49% of basic customers.
During the earnings call, Charter executives didn’t really pinpoint exactly why the picture has suddenly brightened for the operator, although it’s clear that the addition of telephony is helping not only Charter but other cable companies as well. CEO Neil Smit simply said “we sold more products to more customers at higher prices.”
| Charter Operational Statistics | |||
| Subscribers and Penetration | 1Q05 | 4Q05 | 1Q06 |
| Homes Passed | 12,214,900 | 12,519,300 | 12,582,100 |
| Basic subscribers | 5,984,800 | 5,884,500 | 5,913,000 |
| Basic penetration | 49% | 47% | 47% |
| Monthly Analog Rev./Sub. | $ 37.80 | $ 37.66 | $ 37.97 |
| Total Customer Relationships | 6,226,500 | 6,157,200 | 6,201,600 |
| Total Revenue Generating Units | 10,713,100 | 10,999,000 | 11,293,800 |
| Digital Cable | 1Q05 | 4Q05 | 1Q06 |
| Digital-ready homes | 12,104,600 | 12,427,800 | 12,493,100 |
| Digital customers | 2,694,600 | 2,796,600 | 2,866,400 |
| Quarterly net sub adds | 19,900 | 47,200 | 69,800 |
| Digital penetration of total subs | 45% | 48% | 48% |
| Rev. Per Digital Sub. | $ 24.58 | 25.45 | 27.66 |
| High-Speed Data | 1Q05 | 4Q05 | 1Q06 |
| HSD-ready homes | 10,944,700 | 11,260,300 | 11,338,200 |
| HSD customers | 1,978,400 | 2,196,400 | 2,322,400 |
| Quarterly net sub adds | 94,000 | 76,400 | 126,000 |
| Penetration of homes reached | 18% | 20% | 20% |
| Rev. Per HSD Sub./Mo. | $ 37.11 | $ 36.60 | $ 37.33 |
| Telephony | 1Q05 | 4Q05 | 1Q06 |
| Telephony homes passed | 850,000 | 2,918,000 | 3,911,600 |
| Telephony customers | 55,300 | 121,500 | 191,100 |
| Quarterly net sub adds | 9,900 | 31,600 | 69,600 |
| Penetration of telephony HP | 6.5% | 4.2% | 4.9% |
| Pro Forma tel. rev./tel. sub. | $ 41.34 | $ 39.57 | $ 43.00 |
| Bundled Customers | 1Q05 | 4Q05 | 1Q06 |
| Total Bundled Customers | 1,743,800 | 1,944,800 | 2,050,200 |
Posted by Cynthia Brumfield at 10:22 AM | Print | Comments (0)
In a move that could help poor nations and boost its market share at the same time, Intel will announce today that it plans to produce a sub-$400 laptop and will spend $1 billion on wireless Internet access and teacher training over the next five years. The initiative is called World Ahead and reflects a doubling of what Intel had planned to spend on training and support in areas that are behind the digital curve.
Intel says it plans to train 10 million teachers world-wide, and that it already has a running start with the training to date of three million teachers. The low-cost laptops that Intel plans to support differ from the hand-cranked $100 devices envisioned by MIT’s Nicholas Negroponte in that they will be full-featured, with enough memory and power to run Microsoft applications.
Update: The San Jose Mercury News has this article that notes that AMD also has a low-cost computer initiative called 50x15, which is designed to get 50% of the world’s population using computers by the year 2015. AMD has already debuted a sub-$300 computer that runs only a subset of Windows applications.
Posted by Cynthia Brumfield at 8:51 AM | Print | Comments (0)
Consumer broadband speeds continue to climb, thanks in large part to Verizon and its FiOS service, which relies on bandwidth-rich fiber-to-the-premise architectures. Until Verizon came along offering 15 Mbps/2 Mbps service, cable operators were content with their 3 Mbps options.
Now Verizon is upping the ante again - the company announced yesterday that it is raising the speeds of its FiOS service, the first speed hike, I believe, since the telco launched FiOS. In New York, New Jersey and Connecticut, Verizon upped its $34.95/month tier speeds from 5 Mbps/2 Mbps to 10 Mbps/2 Mbps.
The most popular tier, which had previously delivered speeds of 15 Mbps/2 Mbps, is now 20 Mbps/5 Mbps. That service is priced at $44.95/month with a one-year agreement or $49.95/month with a contract.
Posted by Cynthia Brumfield at 7:02 AM | Print | Comments (0)
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