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Verizon FiOS Dumps The Weather Channel; Viewers Barely Notice As Accu-Weather Takes Its Place

Phillip Dampier March 16, 2015 Competition, Consumer News, Verizon, Video 1 Comment

twc protestThe latest contract dispute over cable programming between The Weather Channel and Verizon FiOS has deprived Verizon customers of The Weather Channel, but more than a few viewers who don’t live for storm porn don’t seem to notice or care.

Verizon’s FiOS TV service has “opted out” of further carriage of the 24-hour weather network, according to Verizon spokesman Lee Gierczynski.

Verizon’s contract with The Weather Channel recently expired and Verizon chose not to renew it. Early last year, DirecTV temporarily dropped the weather network over its proposed wholesale renewal rate, so the asking price is likely a factor in the decision to drop the network.

Conveniently for Verizon, last Friday competitor AccuWeather launched its own 24/7 weather channel and gained five million U.S. viewers on its launch day courtesy of FiOS TV.

A spokesperson for Verizon hinted that the usefulness of The Weather Channel has been diminished with the onslaught of digital devices that can call up a local forecast in seconds instead of waiting for one on a weather cable network.

Verizon might have a point, considering The Weather Channel itself has gradually lost interest in showing local weather in favor of reality programming to slow declining ratings. Weather junkies disapprove.

“The Weather Channel needs to do some internal soul-searching before taking a leap of faith that every FiOS subscriber wants to view their mindless reality shows and watch annoying dum-dums like Al Roker,” commented one affected subscriber in Philadelphia. “Good for you Verizon for dumping once-great but now junk-show/dumbed-down channels. There are more of these channels you can also start getting rid of, don’t stop.”

550x1418_03131223_accuweather_announces_groundbreaking_247_networkAccuWeather also called out The Weather Channel for preempting the weather for “Fat Guys in the Woods” and “Prospectors” — two Weather Channel reality shows that may encounter bad weather, but don’t report on it.

The AccuWeather Network promises viewers “all-weather, all the time without reality-TV fluff,” according to a statement from the State College, Pa.-based media company.

Bloomberg News notes fewer viewers are bothering to watch cable weather channels when they can get a commercial-free forecast instantly from a smartphone without waiting for “Weather on the 8’s.”

AccuWeather Network is aware of this and has not been designed for extended viewing, expecting viewers won’t watch for very long.

“We want our channel to be something you look at, get your weather, and then go back to other programming,” says AccuWeather CEO Barry Lee Myers. “It’s a way to use your TV, just as you might use your tablet or phone.”

That seems to serve Verizon just fine because Shirley Powell, a spokeswoman for The Weather Channel said discussions to renew their contract with Verizon FiOS TV have ended. The Weather Channel is now depending on viewer loyalty to force Verizon to put the network back on the lineup, because lowering the price has not worked.

“In the end, we offered Verizon FiOS our bundle of services at a lower price than the previous contract,” the channel said on its Keep The Weather Channel website. “They were unresponsive to our offer and surprised us and their customers by unexpectedly dropping The Weather Channel, WeatherScan, Weather Channel On Demand and The Weather Channel weather widget from their offering.”

http://www.phillipdampier.com/video/Bloomberg AccuWeather TV Channel Just Has the Weather 3-11-15.flv

Bloomberg News talks to the CEO of AccuWeather about his new 24/7 channel that promises the weather and nothing but the weather. (4:55)

Verizon: Our Legacy Landline Service Areas are Not a Part of Our Future Growth Strategy; Verizon Wireless Is

Verizon's FiOS expansion is still dead.

Verizon’s FiOS expansion is still dead.

Verizon Communications does not see its remaining landline customers as part of the company’s future growth and customers should not be surprised if Verizon sells more of its legacy network to other telephone companies including Frontier, Windstream, and CenturyLink.

Speaking at the Morgan Stanley Technology, Media and Telecom Conference 2015 on March 2, Verizon chief financial officer Fran Shammo made it clear to investors Verizon will dump “non-core” assets that do not align with the company’s future long-term growth strategy, even in areas where FiOS predominates.

Shammo told investors Verizon’s growth strategy is predicated on Verizon Wireless, which will continue to get most of the company’s attention and future investment.

“It’s all around the wireless network and I’ve consistently said before, you should anticipate that wireless CapEx continues to trend up while wireline continues to trend down,” Shammo said.

The bulk of Verizon’s investments in its wired network are being made in areas that are already designated as FiOS fiber to the home service areas. Shammo explained that the company is required to invest in FiOS expansion to comply with agreements signed in cities like New York and Philadelphia to make the service widely available in those communities. Beyond those commitments, Shammo signaled the company isn’t planning any significant new spending to upgrade the rest of its legacy copper network.

“We continue to invest in those things that we believe are the future growth of the company,” Shammo said, and anything involving its wired networks outside of Verizon’s core FiOS service area in the northeast and Mid-Atlantic states probably doesn’t qualify.

Verizon-logoWhat will happen in Verizon service areas that are not considered priorities?

“For the right price and right terms, if there’s an asset we don’t believe is strategic to Verizon and can return shareholder value, we’ll dispose of that asset,” Shammo said.

An example of that strategy was Verizon’s sudden announcement in February it would sell its wireline assets in Florida, California, and Texas to Frontier Communications for $10.54 billion. Although a significant part of those service areas are served by FiOS after Verizon invested more than $7 billion on upgrades, Verizon still plans to abandon customers and walk away from that investment because it is not part of Verizon’s future growth strategy.

“If you look at Florida, Texas, and California, these are three island properties,” Shammo told investors. “FiOS is a very small footprint of those properties compared to the copper [except in] Florida because it was just Tampa. But you look at that and you say strategically there’s really not much we can do with those properties because they are islands.”

Verizon will spend the proceeds from its latest landline sale on the wireless spectrum it just acquired and will pay down some of the debt incurred after buying out Vodafone’s former ownership stake in Verizon Wireless. The company has also undertaken a massive share repurchase program, planning to buy back 100 million shares by 2017 to help its shareholders. To ease investor concerns about some of Verizon’s latest strategic moves, it also announced plans to buy back an extra $5 billion worth of shares in the second quarter of this year.

A close review of the latest Verizon sale to Frontier shows the extent Verizon believes in its wireless business at the cost of its legacy copper and FiOS networks. That comes as no surprise to Verizon observers who note its current CEO used to run Verizon Wireless.

Shammo, as featured on a recent cover of CFO Studio magazine.

Shammo, as featured on a recent cover of CFO Studio magazine.

“It’s been clear for years that Verizon has wanted out of the copper business,” said Doug Dawson from CCG Consulting. “They first sold off large portions of New England to Fairpoint. Then in 2010 they sold a huge swath of lines in fourteen states to Frontier including the whole state of West Virginia. And now comes this sale. It’s starting to look like Verizon doesn’t want to be in the landline business at all, perhaps not even in the fiber business.”

Verizon’s latest sale involves “higher margin properties than the rest of our wireline business,” Shammo said, in part because large parts of the urban service areas involved were previously upgraded to FiOS.

“So if you look at Dallas, we were over 50% penetrated both in TV and broadband,” said Shammo. “So, it was a very highly penetrated market that was delivering a lot of cash flow and delivering a lot of earnings. So by just divesting of the three properties, if you just did it on an apples-to-apples basis, there would be dilution.

Giving up that amount of cash flow — needed to win back the $7 billion in FiOS upgrade investments Verizon made in the three states — would normally concern investors worried about the “stranded costs” left over from investments that were never fully repaid. But Verizon has a plan for that: an “Involuntary Separation Plan” (ISP) for more than 2,000 Verizon employees, a polite way to describe job-cutting layoffs.

“We have a year to plan for this and the plan is similar to what we did with the last time we rolled properties out from Frontier,” Shammo said. “We will plan to offset the stranded cost and those plans are already being worked. You saw a little bit of that in the fourth quarter where we gave some ISPs to the represented employee base and we had 2,100 people come off payroll.”

Verizon’s growing preoccupation with Verizon Wireless leaves some analysts questioning the company’s wisdom giving up high-profit FiOS broadband in favor of wireless at a time when competition among wireless companies is finally emerging.

“Verizon reports an overall 41% market penetration for its data product on FiOS networks,” said Dawson. “Data has such a high profit margin that it’s hard to think that FiOS is not extremely profitable for them. The trend has been for the amount of data used by households to double every three years, and one doesn’t have to project that trend forward very far to see that future bandwidth needs are only going to be met by fiber or by significantly upgraded cable networks.”

Considering the wireless market is maturing and most everyone who wants a cell phone already has one, there are questions about where Verizon sees future growth in a business where it is getting harder to attract new customers.

“Verizon was a market leader getting into the fiber business. FiOS was a bold move at the time,” Dawson reflects. “It’s another bold move to essentially walk away from the fiber business and concentrate on wireless. They obviously think that wireless has a better future than wireline. But since they are already at the top of pile in cellular one has to wonder where they see future growth?”

Verizon Preparing to Sell $15 Billion in Cell Tower/Wired Assets – Tex., Calif., and Fla., Landlines Likely for Sale

Phillip Dampier February 3, 2015 Consumer News, Verizon 1 Comment
Verizon's landline coverage map.

Verizon’s landline coverage map.

Verizon is working on a sale of its cellphone towers and a portion of its landline assets in a series of deals that could fetch the company more than $15 billion, according to a breaking report in the Wall Street Journal.

The company is looking to raise cash to pay down debt incurred when it bought out Vodafone’s 45% share of its wireless unit and to cover $10.4 billion in wireless licenses the company just won in a government auction last week.

The most likely targets in a landline sale are Verizon territories outside of the northeast.

Verizon has already dumped its landline assets in Hawaii (sold to Hawaiian Telcom), northern New England (sold to FairPoint Communications), West Virginia and many smaller city and suburban territories acquired from GTE (all sold to Frontier).

In its 2010 sale to Frontier, Verizon retained assets in the Tampa-St. Petersburg area, central Texas and Southern California regions. But now all three states are prime targets for a sale. Likely buyers include Frontier Communications, which already has a major presence in Florida including a national call center, and CenturyLink, which acquired Qwest and has a large service area in the southwest and western United States. Frontier remains the most likely buyer, having aggressively expanded its landline network in legacy AT&T (Connecticut) and Verizon service areas.

Verizon CEO Lowell McAdam has shown little interest in maintaining Verizon’s wired assets or growing FiOS and has been willing to sell off major parts of Verizon’s landline network to continue prioritizing Verizon Wireless. McAdam led Verizon Wireless from 2006-2010, before being named CEO of Verizon Communications.

Verizon-logoHe foreshadowed the forthcoming landline sale in January when he told an investor conference he was willing to make significant cuts to Verizon’s wired networks.

“There are certain assets on the wireline side that we think would be better off in somebody else’s hands so we can focus our energy in a little bit more narrow geography,” he said at the time.

Verizon is also expected to follow AT&T’s lead in selling off much of its cell tower portfolio. It will lease access to the towers it sells.

Verizon maintains FiOS networks in Texas, California, and Florida, but that is not expected to deter the company from selling its landline assets. Frontier acquired Verizon FiOS properties in the 2010 sale in both the Pacific Northwest and Indiana. Those services operate under the Frontier FiOS banner today.

Stop Paying Regular Price for HBO and Cinemax; Cancel and Rebuy for $10/Month

2000px-HBO_logo.svgAre you still paying $15+ for HBO and $13+ for Cinemax? Stop.

Most major cable television providers are slashing the price for both premium movie channels to protect subscriber numbers from the April introduction of HBO’s standalone video streaming service, likely to be called HBO Go.

Most analysts expect the on-demand service will cost $15 a month for one or both co-owned networks. With Time Warner Cable recently raising the price of HBO to $16.99 a month, the company may have priced itself out of the market.

“Why would I waste my time with HBO from Time Warner Cable when I will be able to get HBO Go for $2 less a month and won’t have to buy their larded-up cable television package,” asks Watertown, N.Y. resident Jeff Kates. “Their greed will cost them when they lose more subscribers than they gain in revenue from the rate hike.”

Comcast has already seen the writing on the wall and this year cut its regular pricing for HBO from $18.95 to $15 — matching the likely price of standalone HBO Go.

In an effort to lock in customer loyalty and avoid accelerating cord-cutting, many major pay television providers are putting one or both Time Warner (Entertainment)-owned networks on sale for much of 2015. These prices are available to any new premium cable subscriber. If your provider will not switch your current subscription to the new promotional rate, cancel one or both channels for a few days (or threaten to cancel service altogether) and then resubscribe at the discounted price.

Here are the current offers:

  • AT&T U-verse: Bundles HBO and a year of Amazon Prime service with a package of mostly local over the air channels for around $40-50 a month depending on the promotion;
  • Charter Cable: Charter’s Triple Play Silver package bundles HBO, Cinemax, Showtime/Movie Channel premium channels into the television package at no extra charge;
  • Comcast: Offers HBO for online sign ups at $10 a month for a year. Comcast attempts to limit the offer to customers who have not subscribed to HBO for the last 120 days, but this condition is usually waived if you threaten to cancel service and switch to a phone or satellite company;
  • Cox: Stingier than others, Cox is offering discounts for just six months, but gives you quantity discounts. Buy 1 premium channel at $10/mo, two channels for $15, three for $20 or four networks for $25 a month. Your choices include HBO, Cinemax, Showtime, and Starz;
  • Time Warner Cable: Now has a sale running for $9.99/mo HBO and the same rate for Cinemax, Showtime, and Starz when ordered online. Current non-premium customers can upgrade from the My Account portal. Current premium channel customers will have to call Time Warner and argue for the discount or cancel HBO and quickly resubscribe;
  • Verizon: Also offers HBO and others at $9.99/mo for the first year.

Satellite services are expected to change their pricing on premium channels sometime this month.

Verizon Cutting Wireline Broadband Investments: Still No FiOS Expansion, Less Money for Wired Networks

Verizon's FiOS expansion is still dead.

Verizon’s FiOS expansion is still dead.

Verizon Communications signaled today it plans further cuts in investments for its wireline network, which includes traditional copper-based telephone service and DSL as well as its fiber-optic network FiOS.

“We will spend more CapEx in the wireless side and we will continue to curtail CapEx on the wireline side,” Verizon’s chief financial officer Fran Shammo told investors this morning. “Some of that is because we are getting to the end of our committed build around FiOS.”

Instead of expanding its FiOS fiber to the home network to new areas, Verizon is trying to increase its customer base in areas previously wired. It is less costly to reconnect homes previously wired for FiOS compared with installing fiber where copper wiring still exists.

Verizon continues to lose traditional landline customers, so the company is increasingly dependent on FiOS to boost wired revenue. The fiber network now accounts for 77% of Verizon’s residential wireline revenue.

Wherever FiOS exists, it has taken a significant number of customers away from cable competitors. FiOS Internet has now achieved 41.1% market penetration, with 6.6 million customers, up 544,000 from last year. Of those, the majority want broadband speeds they were not getting from the cable company. At the end of 2014, 59% of FiOS Internet customers subscribe to broadband speeds above 50Mbps, up from 46% at the end of 2013.

Verizon-logoDespite the success of FiOS, Verizon’s senior management continues to devote more attention to its highly profitable Verizon Wireless division, spending an even larger proportion of its total capital investments on wireless services.

In 2014, Verizon spent $17.2 billion on capital expenditures, an increase of 3.5% over 2013. But only $5.8 billion was spent on maintaining and upgrading Verizon’s landline and FiOS networks, down 7.7% over 2013. Verizon Wireless in contrast was given $10.5 billion to spend in 2014. The company is using that money to add network density to its increasingly congested 4G LTE network. In many cities, Verizon Wireless is activating its idle AWS spectrum to share the traffic load and is accelerating deployment of small cell technology and in-building microcells to deal with dense traffic found in a relatively small geographic area — such as in sports stadiums, office buildings, shopping centers, etc.

Verizon Wireless is branding its network expansion “XLTE,” which sounds to the uninitiated like the next generation LTE network. It isn’t. “XLTE” simply refers to areas where expanded LTE bandwidth has been activated. Unfortunately, many Verizon Wireless devices made before 2014 will not benefit, unable to access the extra frequencies XLTE uses.

With Verizon increasing the dividend it pays shareholders, the company is also cutting costs in both its wired and wireless divisions:

  • Verizon Wireless’ 3G data network will see a growing amount of its available spectrum reassigned to 4G data, which is less costly to offer on a per megabyte basis. As Verizon pushes more 4G-capable devices into the market, 3G usage has declined. But the reduced spectrum could lead to speed slowdowns in areas where 3G usage remains constant or does not decline as quickly as Verizon expects;
  • Verizon will push more customers to use “self-service” customer care options instead of walking into a Verizon store or calling customer service;
  • The company will continue to move towards decommissioning its copper wire network, especially in FiOS areas. Existing landline customers are being encouraged to switch to FiOS fiber, even if they have only landline service. Copper maintenance costs are higher than taking care of fiber optic wiring;
  • Verizon has accelerated the closing down of many central switching offices left over from the landline era. As the company sells the buildings and property that used to serve its network, Verizon’s property tax bill decreases;
  • Verizon will continue cutting its employee headcount. Shammo told investors in December, Verizon Communications cut an extra 2,300 employees that took care of its wired networks.

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