June 21, 2010

Verizon Offering FiOS Free For A Month

Verizon Communications is now allowing customers to try out its FiOS Internet and television services free for a month.

Verizon hopes to lure more customers away from cable and satellite rivals with the offer, which includes the option of paying month-by-month with the assurance that the price would not go up for a year.

The risk is that new customers could leave just after a month of free use, which would be a $1,350 loss for Verizon after installing a FiOS system.

Matt Davis, an analyst at research firm IDC, said the move was part of a "growing trend" for television and telecom providers to add more flexibility to their service terms.

"Verizon's reacting to that trend, trying to stay slightly ahead of it," he told Reuters.

AT&T Inc. and Verizon have been adding TV services to their offerings in recent years, to help them compete better with cable operators which have long sold telephone services.

Larry Hettick, a Current Analysis analyst, said he sees Verizon keeping a "substantially large" number of customers who sign up under the new rules, making it likely rivals will react.

"There's so much tit-for-tat in the cable TV business, anything that changes for one provider may bring pressure on the others," Hettick told Reuters.

Verizon is kicking off on Monday across its FiOS coverage region, which currently has a potential 12 million customers for television services and 12.6 million for Internet services.

Hettick said there is some risk Verizon will be left in the lurch by customers, which could potentially leave for cable operators a month after signing up for Verizon.  However, he said the offer showed that the company is confident it will keep customers.

Verizon started offering its FiOS Internet service in August 2004 and started selling FiOS TV about a year later.

Verizon spokesman William Kula said that since then its TV service has won about 25 percent market share in the areas where it operates and FiOS Internet has about 29 percent share.

Kula said he believes that once customers have a chance to try out FiOS "they'll stick with (it) for the long haul."

He said that he sees current uncertainty around the economy making the offer particularly attractive for anxious customers that are worried about surprise price rises or early termination fees.


On the Net: