Verizon Communications, aiming to slow the flow of voice customers to cable, last week introduced six new multiservice bundles — including a quadruple play with phone, broadband Internet, video and Verizon Wireless mobile-phone services.
Rather than Verizon’s own FiOS TV service, the service included in the bundles is the 155-channel “Total Choice” package from direct-broadcast satellite provider DirecTV. The phone service is Verizon’s unlimited calling plan, called Freedom Essentials, and the Internet service is the telco’s digital-subscriber-line offering of up to 3 Megabits per second.
Analysts saw the move as a stopgap measure until the telco’s fiber-optic FiOS network becomes more widely available. Verizon said FiOS TV was available to 2.4 million homes at the end of 2006 — or less than 10% of its total customer base — and the telco expects the FiOS network to pass 18 million homes by 2010.
“They need to do this now. They can’t wait for however many years it will take to get FiOS to their whole footprint,” Strategy Analytics senior analyst Martin Olausson said. “If they do wait, cable will have taken most of their landline business.”
Verizon, however, has positioned the move as leapfrogging cable, and the telco plans to aggressively market the triple- and quad-play bundles on a regional basis.
“I believe we will pass the competition with these bundles,” said Maria Malicka, Verizon Telecom director of product management for bundled solutions. “Nobody else has as ubiquitous a triple play … and we’re the first to offer the quad play that is available to millions and millions of customers.”
At the same time, Verizon acknowledged that the multiplay offers are designed to prevent customer defections to cable. In 2006, the company reported last week, it lost 3.1 million residential phone customers, a 10% year-to-year drop, ending the year with 27.8 million.
“These prices match pretty much any cable play, and we’re going to promote the fact that you can stay with Verizon and don’t have to leave us and go to cable,” said director of media relations for branding issues Jim Smith.
The bundles will be tailored to the competitive environment in each of Verizon’s nine U.S. regional markets, Smith added.
“Verizon realized that we were probably disadvantaging ourselves in being a national marketing company when the local markets are so diverse,” Smith said. “You might have a fat, pink and happy cable company where they can cut prices in one area. In other areas they’re in more trouble.”
Verizon soft-launched the bundled offers in early January in Florida and Texas. The early results: The quad play has been selected by 5% of customers who ordered bundles, according to Malicka. That was three times the take rate Verizon had expected, she said.
“If you ask customers in a research setting to what degree they see value in a quad play, you’d probably get a lukewarm response,” Malicka said. “But the proof is in the volume of orders coming in for the quad play.”
There’s at least one catch for Verizon’s wireless leg of the table, though: It requires customers to have existing Verizon Wireless account. The Verizon Wireless calling plan included in the bundles is $39.95 per month, which includes 450 anytime minutes and unlimited night and weekend minutes.
Cable’s highest-profile attempt to get to a quad play has been the joint venture between Sprint Nextel and four cable operators, Comcast, Cox Communications, Time Warner Cable and Advance/Newhouse Communications. The operators in the last few months have begun marketing mobile phone services in about a half-dozen markets.
But Time Warner, for one, has said it won’t explicitly market a quad-play bundle. Rather, company executives said that they will emphasize the benefits of integrating mobile with the triple play services.
Verizon’s bundles are available now in 24 of the 28 states Verizon offers landline service areas, plus the District of Columbia. Excluded for now are Vermont, Nevada, Arizona and Washington State, though the company said it will soon make the multiplay bundle offers in Washington.
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