Article from Bloomberg News on FIOS and Time Warner
Verizon Takes Cable Fight to Tishman Buildings With Chips, Goo
By Amy Thomson
Sept. 11 (Bloomberg) -- In a south Manhattan manhole last month, Verizon Communications Inc. workers coated an inch-wide fiber-optic line with goo to slide it past crowds of cable- television wires under the street.
If only it were so easy to slip past the competition.
Verizon, the phone company spending $23 billion to get into the U.S. TV market, is up against price discounts and advertising campaigns by rivals as it seeks a foothold in New York. The Verizon FiOS package of video, phone and Internet access debuted July 28 in the largest U.S. city, where the company is giving away HBO movies and throwing parties at apartment buildings to win customers.
``New York would be their biggest opportunity, so if that doesn't go well, it would be a bad sign,'' said Todd Rethemeier, a New York-based Soleil Securities analyst. He advises holding onto the stock and called success in fiber optics ``critical.''
The city of more than 8 million may be a bellwether for FiOS across the country, where the market for what's known as triple- play bundles may balloon 50 percent to more than $110 billion by 2012.
Time Warner Cable Inc. rules in Manhattan. Cablevision Systems Corp. dominates Brooklyn and the Bronx.
Verizon, the second-largest U.S. phone company after AT&T Inc., also is contending with an economic slowdown that is limiting consumer spending. That may stymie efforts to use service bundles to make up for its fixed-line business, which accounts for half of revenue and is shrinking amid cable competition.
Guinea Pig
FiOS offers Web-based TV that is streamed down fiber optic lines underground and into homes. The all-fiber system differs from what's offered by AT&T, which uses a mix of fiber and older copper wires.
The FiOS technology provides the fastest Internet speed in the U.S., Verizon says. Installation can take up to 6 hours.
``I feel a little guinea-pig-like,'' Jay Amato said as workers threaded wire from a hub on the floor below into a closet by the door of his 1,900-square-foot Tribeca apartment overlooking the Hudson River. After watching Internet TV for the first time, he said it was ``great.''
Verizon started FiOS in 2004 in Keller, Texas, outside Dallas, and is now breaking into cities, including St. Petersburg, Florida, and Providence, Rhode Island.
In New York, where the carrier is based, officials waited until suppliers such as Corning Inc. began selling fiber that can be bent around corners of buildings without losing signal or strength. Verizon then struck agreements to promote the service with landlords, including Tishman Speyer Properties LP, owner of the 11,232-unit Stuyvesant Town and Peter Cooper Village.
Fighting Cable
``In its own backyard, near the headquarters, it's extremely important to have its best product,'' said Wachovia Securities Inc. analyst Jennifer Fritzsche in Chicago, who advises investors to hold the shares and doesn't own any.
FiOS has 1.38 million TV subscribers, while Time Warner Cable has 13.3 million. By the end of 2010, FiOS will be available to 18 million U.S. households, according to Verizon. In New York's five boroughs, the company's plan is to install fiber optic lines to 3.1 million homes by 2014.
FiOS phone, Internet and TV costs $94.99 a month in Manhattan. For new customers, Time Warner Cable sells a three- year deal for its cheapest package, with slower Internet service, for $89.95 a month in the first year and $104.95 the next two.
About 70 percent of local FiOS subscribers switch from cable service, said Courtney Johnson, FiOS operations manager for Southern Manhattan.
Verizon fell 51 cents to $34.72 yesterday in New York Stock Exchange composite trading. The stock has lost 20 percent this year.
Sharp Message
Verizon marketers spend three or four nights a week in apartment lobbies wooing customers with chips, soda and one-on- one demonstrations. They sign up 20 to 30 people a night, account manager Debbie Roth said. In boroughs outside Manhattan, where there are more single family homes, they throw neighborhood barbeques.
To fight back, Time Warner Cable is running ads telling customers ``Don't be Ed,'' a man whose yard was destroyed during a FiOS installation. Cablevision spokesman Jim Maiella said its ads highlight ``unique'' features such as free wireless Internet access and a caller ID that appears on the TV screen.
``We've sharpened our message a little bit to call them out directly,'' Time Warner Cable spokesman Alex Dudley said.
Slowdown
Last quarter, Verizon TV subscriptions rose 15 percent from the quarter before. A year earlier, second-quarter subscriptions were up 48 percent.
Verizon spokeswoman Bobbi Henson attributed slowing growth to promotions a quarter earlier. FiOS TV's penetration rates, the percentage of the covered population that subscribes to the service, have risen every quarter, she said.
The slowdown is partly because cable providers' ads are proving effective and also is a response to the slump in the housing market, Rethemeier said. It's easier to get consumers to switch service when they move, and fewer people are moving now.
``The cable companies have gotten more on the ball with marketing, marketing their triple plays in order to retain customers,'' Rethemeier said.
To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net
Last Updated: September 11, 2008 00:01 EDT
Verizon Takes Cable Fight to Tishman Buildings With Chips, Goo
By Amy Thomson
Sept. 11 (Bloomberg) -- In a south Manhattan manhole last month, Verizon Communications Inc. workers coated an inch-wide fiber-optic line with goo to slide it past crowds of cable- television wires under the street.
If only it were so easy to slip past the competition.
Verizon, the phone company spending $23 billion to get into the U.S. TV market, is up against price discounts and advertising campaigns by rivals as it seeks a foothold in New York. The Verizon FiOS package of video, phone and Internet access debuted July 28 in the largest U.S. city, where the company is giving away HBO movies and throwing parties at apartment buildings to win customers.
``New York would be their biggest opportunity, so if that doesn't go well, it would be a bad sign,'' said Todd Rethemeier, a New York-based Soleil Securities analyst. He advises holding onto the stock and called success in fiber optics ``critical.''
The city of more than 8 million may be a bellwether for FiOS across the country, where the market for what's known as triple- play bundles may balloon 50 percent to more than $110 billion by 2012.
Time Warner Cable Inc. rules in Manhattan. Cablevision Systems Corp. dominates Brooklyn and the Bronx.
Verizon, the second-largest U.S. phone company after AT&T Inc., also is contending with an economic slowdown that is limiting consumer spending. That may stymie efforts to use service bundles to make up for its fixed-line business, which accounts for half of revenue and is shrinking amid cable competition.
Guinea Pig
FiOS offers Web-based TV that is streamed down fiber optic lines underground and into homes. The all-fiber system differs from what's offered by AT&T, which uses a mix of fiber and older copper wires.
The FiOS technology provides the fastest Internet speed in the U.S., Verizon says. Installation can take up to 6 hours.
``I feel a little guinea-pig-like,'' Jay Amato said as workers threaded wire from a hub on the floor below into a closet by the door of his 1,900-square-foot Tribeca apartment overlooking the Hudson River. After watching Internet TV for the first time, he said it was ``great.''
Verizon started FiOS in 2004 in Keller, Texas, outside Dallas, and is now breaking into cities, including St. Petersburg, Florida, and Providence, Rhode Island.
In New York, where the carrier is based, officials waited until suppliers such as Corning Inc. began selling fiber that can be bent around corners of buildings without losing signal or strength. Verizon then struck agreements to promote the service with landlords, including Tishman Speyer Properties LP, owner of the 11,232-unit Stuyvesant Town and Peter Cooper Village.
Fighting Cable
``In its own backyard, near the headquarters, it's extremely important to have its best product,'' said Wachovia Securities Inc. analyst Jennifer Fritzsche in Chicago, who advises investors to hold the shares and doesn't own any.
FiOS has 1.38 million TV subscribers, while Time Warner Cable has 13.3 million. By the end of 2010, FiOS will be available to 18 million U.S. households, according to Verizon. In New York's five boroughs, the company's plan is to install fiber optic lines to 3.1 million homes by 2014.
FiOS phone, Internet and TV costs $94.99 a month in Manhattan. For new customers, Time Warner Cable sells a three- year deal for its cheapest package, with slower Internet service, for $89.95 a month in the first year and $104.95 the next two.
About 70 percent of local FiOS subscribers switch from cable service, said Courtney Johnson, FiOS operations manager for Southern Manhattan.
Verizon fell 51 cents to $34.72 yesterday in New York Stock Exchange composite trading. The stock has lost 20 percent this year.
Sharp Message
Verizon marketers spend three or four nights a week in apartment lobbies wooing customers with chips, soda and one-on- one demonstrations. They sign up 20 to 30 people a night, account manager Debbie Roth said. In boroughs outside Manhattan, where there are more single family homes, they throw neighborhood barbeques.
To fight back, Time Warner Cable is running ads telling customers ``Don't be Ed,'' a man whose yard was destroyed during a FiOS installation. Cablevision spokesman Jim Maiella said its ads highlight ``unique'' features such as free wireless Internet access and a caller ID that appears on the TV screen.
``We've sharpened our message a little bit to call them out directly,'' Time Warner Cable spokesman Alex Dudley said.
Slowdown
Last quarter, Verizon TV subscriptions rose 15 percent from the quarter before. A year earlier, second-quarter subscriptions were up 48 percent.
Verizon spokeswoman Bobbi Henson attributed slowing growth to promotions a quarter earlier. FiOS TV's penetration rates, the percentage of the covered population that subscribes to the service, have risen every quarter, she said.
The slowdown is partly because cable providers' ads are proving effective and also is a response to the slump in the housing market, Rethemeier said. It's easier to get consumers to switch service when they move, and fewer people are moving now.
``The cable companies have gotten more on the ball with marketing, marketing their triple plays in order to retain customers,'' Rethemeier said.
To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net
Last Updated: September 11, 2008 00:01 EDT
