Verizon Plans Q2 Rate Hike For FiOS

Verizon Communications will raise prices on certain FiOS services sometime this quarter—its third such increase within the last 18 months—but the telco isn't yet providing specifics.

“We anticipate increasing prices once again in certain [FiOS] products and bundles in the second quarter this year,” Verizon chief financial officer Doreen Toben said on Monday's earnings call.

A Verizon spokeswoman said the company was providing no additional details about the rate increases at this point.

Verizon just increased the price of the primary FiOS TV programming package for new subscribers, as of Jan. 20. The 200-channel FiOS TV Premier package now costs $47.99 per month for new customers, compared with $42.99 for customers who signed up last year.

And a year before that, it upped the rates for the Premier package from $39.95 to $42.99 for new customers as of Jan. 8, 2007.

In the past Verizon has told the Federal Communications Commission and other regulators that competitive video providers would drive rates down.

In a July 2006 filing with the FCC, Verizon cited a study by Bank of America that said cable companies offered “significant price decreases” on services in response to the telco's entry in Keller, Texas; Herndon, Va.; and Temple Terrace, Fla. Verizon executives said deals offered by incumbent cable operators in those markets were as much as 50% lower than their regular prices.

Verizon now counts 1.2 million subscribers, making it the 11th-largest video service operator in the United States, including cable and satellite providers.

For the first quarter, Toben said the average revenue per FiOS subscriber was about $129 per month—more than double the telco’s overall consumer retail ARPU (average revenue per unit), she pointed out, adding that “since not everyone has all three services, the triple-play ARPU is even higher.”

FiOS TV is now available to 6.5 million households in parts of 13 states. Verizon added 263,000 new FiOS TV customers in the first quarter, a rate of 4,100 per day. The company expects to have at least 4 million FiOS TV customers by 2010, which would be a market penetration of at least 25%.