Verizon's FiOS TV: Router, Cost and Pricing

Router

The newly launched Broadband Home Router will be the centerpiece of verizon customer’s home network. The new router – designed and built to Verizon’s specifications and supplied by Actiontec Electronics of Sunnyvale, Calif. – is the basis of Verizon’s digital home architecture, and is capable of providing connectivity to the FiOS network at speeds of up to100 megabits per second (Mbps). It leverages existing in-home wiring for broadband data and video signals and delivers easy, high-quality, more reliable home-networking solutions to provide connectivity to the increasing number of connected consumer devices. The new broadband home router also supports remote management that uses new industry standards known as TR-069, enabling Verizon to perform troubleshooting without having to dispatch a technician. Customers who purchase Verizon’s FiOS Internet Service products, as well as those who order FiOS TV, will automatically receive the new router as part of the installation.

Known as Actiontec’s model MI-424-WR, the new broadband home router was built to Verizon’ specifications and allows Verizon to accomplish its goal of providing, high-quality managed broadband services over a unified home network to all connected devices. This any-to-any device capability allows transmission of FiOS data and video signals between the Internet and consumer devices in any room, enabling a true digital home experience.

The optical network terminal (ONT) where Verizon’s fiber terminates at the customer’s home will soon be upgraded with technology similar to the Broadband Home Router. This will minimize installation disruption for Verizon customers because existing in-home coaxial wiring can be used instead of the Ethernet cable that the company has been installing between the ONT and the router. This results in savings for Verizon through shorter installation times, increased productivity and reduced installation expenses.

In addition, the new router’s wireless capability allows the customer to connect with other wireless card-equipped computers within the home. The Actiontec router’s 100 Mbps capability allows Verizon to continue to provide higher data speeds to the customer, as they become available in the future, without having to install a new router or other equipment in the customer’s home. Verizon’s FTTP network is capable of providing such speeds. In addition, the new router allows Verizon to remotely assist customers in configuring it to meet specific needs within the home. Verizon also provides customers a business-class Internet firewall on the router.


Cost

Because most homes already have coaxial cable installed in several rooms, Verizon can significantly reduce its FiOS installation costs by using existing cabling to connect home computers to its broadband service. Today, Verizon installs Category 5 cabling for customers who have signed up for a year of broadband service free of charge. Customers choosing a month-to-month plan, must pay $69.99 for the installation. This was in addition to the $1,400 per home the company spent digging up neighborhood streets and stringing fiber on telephone poles. Verizon hopes to reduce these costs significantly in 2006. Specifically, it plans to cut the cost of laying new fiber in neighborhoods to $890 per home and reduce the cost of home installation to $715 per home.In late February, Verizon estimated its costs nearly $1,000 to bring fiber near a home. The cost to bring fiber into a home is falling, but haven't yet reached their target cost of $717 per installation. Long installs are a potential money pit for Verizon and a major hassle for customers, who in most cases have to take an entire day off to be there. On an average it takes 6 hours to install FiOS TV. Normally there are five to six followup calls just to make sure everything is working well.


Pricing

The reasons consumers give for switching to Verizon's fiber-optic service vary. Some are turned off by the steady rate increases of cable companies. Some lust for the picture quality and speed of FiOS. Some merely like the convenience of having all their telecommunications services, including wireless, on one bill.

For example In Woburn, Verizon is competing against two cable companies, Comcast and RCN, and two satellite companies, DirecTV and Dish TV. Verizon's FiOS TV and Internet monthly services cost $40 apiece or $70 as a bundle, plus $4 to $13 for a set-top box. Phone plans vary, with unlimited domestic calling costing anywhere from $25 to $40, depending on the features and type of service. Comparable packages at competitors cost more, but apples-to-apples comparisons are difficult. Both Comcast and RCN are currently offering three-way bundles that cost roughly $100, although both bundles have fewer TV channels than Verizon. Comcast's bundle price expires after 12 months and then rises to $121. Moreover according to Verizon, their fiber will be capable of carrying far more content at faster speeds than cable. The top Internet speed now is 30 megabits per second, but speeds of 100 megabits per second may be possible as early as next year.

Comcast, after completing a major overhaul of its network in 2003, has ratcheted up the speeds of its Internet service, beefed up its video-on-demand offerings to 7,000 programs, and cut customer complaints with its four call centers in Massachusetts. The cable giant is also preparing to take another bite out of Verizon later this year by launching a wireless phone service that will run on the Sprint network.