Verizon FiOS hits 5 million subscriber mark as consumer revenues climb

Verizon (NYSE: VZ) added 140,000 FiOS video customers in the second quarter and now has more than 5 million customers nationwide, the carrier said in announcing second quarter earnings. The 140,000 additions were less than the 169,000 video subs Verizon added in the first quarter, but still an improvement over cable numbers which continue to decline.

In other FiOS business, Verizon said it added 161,000 broadband subscribers (down from the 188,000 additions in the first quarter) to bring that total number to 5.8 million.

FiOS, both video and broadband, is driving revenue, CFO Francis Shammo said in a conference call with analysts.

"We continue to see positive signs highlighted by sustained FiOS revenue growth. Consumer revenues grew 4.7 percent driven by FiOS, which now represents 71 percent of (wireline) consumer revenue. Our overall consumer monthly ARPU increased 9.4 percent to more than $109 and we sustained a blended FiOS ARPU at over $150 a month," Shammo said. "Two-thirds of our FiOS customers are triple play, which have a higher amount of reoccurring revenue per month."

Still, Verizon has no plans to expand FiOS beyond the markets where it is already offered and where the carrier is embarked on an aggressive copper-to-fiber migration designed to move non-FiOS broadband subscribers into the FiOS fold. That migration will eventually—but not anytime soon-result in an all-IP network, Shammo said.

"That's going to be quite some time in order to deactivate the copper switches and take all of that plant and equipment out," Shammo cautioned a questioner. "We have the plans to do that but that's not something that's going to be done within this year or next year."

What is going to be done within this year or next year is an increased level of activity in an ongoing relationship between Verizon Wireless and a group of cable operators that includes Comcast (Nasdaq: CMCSA), Cox Communications, Time Warner Cable (NYSE: TWC) and Bright House Networks. Rather than pursuing a tack of delivering FiOS via LTE--something that AT&T (NYSE: T) is planning with its U-verse IPTV service--Verizon chose to work together with the cable operators to jointly develop products and sell Verizon Wireless along with cable service in non-FiOS markets.

"It's hard for Verizon Wireless to sell a cable product outside of the FiOS footprint because it's new and it's hard for the cable companies to sell a wireless product outside of the footprint because of distribution channels," Shammo said. "So as we continue to work through this we're gaining some momentum here."

According to Shammo, Verizon is marketing cable services in 968 Verizon Wireless stores across the country and 2,500 "indirect locations."

As for wireline FiOS, Shammo also indicated that the service is gaining momentum in the MDU marketplace.

"What's differentiating us right now is the superiority of our product with fiber into the home," Shammo said. This advantage, he said, has become evident to customers who are affected by the copper-to-fiber migration.

For more:
- Verizon issued this press release
- and recorded this webcast

Earnings summary: Wireline telecom earnings in the second quarter of 2013

Related articles:
Verizon adds 140K FiOS TV subs; video penetration increases to 38.6% in Q2 2013
Verizon's wireline consumer revenue rises to $3.6 billion on strong FiOS adds