Verizon ripped a page out of T-Mobile’s playbook on Thursday, announcing a slew of changes to its Fios home Internet and TV service that broke from some of the cable industry’s longtime, customer-annoying practices.
In an announcement reminiscent of T-Mobile’s “Uncarrier” plans that shook up wireless, Verizon said it was eliminating multi-year contracts, multi-service bundles, weird added fees at the bottom of bills, and other nickel and diming cable features. Instead, Fios will offer Internet at a couple of speeds, priced at $40 to $80 monthly, and a couple of TV packages, priced from $50 to $90. The channel line ups of the TV packages will be more customizable than in the past, as well.
Most important in this era of cord cutting, customers will be able to buy just Internet service and get the lowest pricing without also having to subscribe to TV service. That could be appealing to the millions of consumers who have dropped cable in favor of Netflix and other online-only alternatives.
But whether the moves will have the same impact on the other big cable players as T-Mobile’s widely copied “Uncarrier” strategy had on the wireless industry is yet to be seen. The initial stock market reaction was muted, with shares of Verizon down 1%, Comcast and Altice about unchanged, and Charter Communications up 1%.
That’s probably because there is one big difference that could greatly limit Verizon’s ability to have the same disruptive impact as T-Mobile. While any consumer in the country can sign up for T-Mobile wireless service, only a small fraction of cable and Internet customers even have Verizon’s service as an option.
Among about 100 million U.S. households that subscribe to home Internet service and 80 million to cable TV, Fios has 6 million Internet and 4 million cable TV customers. And Verizon passes only about 15 million homes that could potentially subscribe to Fios, according to the last time it revealed the number at the end of 2017. Since 2010, when Verizon halted major expansion of the service, the carrier has added only one new city (Boston in 2018).
Another challenge is that Verizon hasn’t eliminated all of the cable industry’s expensive, unwanted features. It will still charge customers extra for equipment, $12 per month for a cable box and $15 per month for a router. To be sure, T-Mobile didn’t eliminate all customer pain points in its first Uncarrier move in 2013, but steadily improved its offerings over subsequent years.
The equation could change significantly as Verizon expands its current, limited 5G home Internet and TV service. Currently available in just a few cities, Verizon is awaiting better gear from hardware makers before expanding much more. The company says it plans for the service to be within reach of 30 million homes within five to seven years.
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