Monday, March 07, 2005

What's FIOS?

A commenter recently asked: What's FIOS?

FIOS is Verizon's marketing term for "fiber to the home" (the generic term is just its abbreviation: FTTH). Verizon plans to deliver internet, video, and phone service over fiber. Why is this good? Because fiber has more capacity (way more capacity) than anything else.

Verizon plans to roll out this service over the next few years to the same areas it already offers local service. It's currently installing fiber in a number of states including my own. Where I live (Montgomery County MD), Verizon has been installing fiber for about 4 months and they've already turned it on for some customers.

FIOS is going to be a rude shock for the cable companies that have enjoyed a de facto monopoly in much of the US. Where I live, Comcast is the only provider of high-speed residential internet service, so I pay $57.95 a month. But Verizon is already advertising more speed for less money.

Here's how it lays out, ordered by price. Notice that the lowest price is way below Comcast's lowest (and most popular) level of service AND at that price FIOS is faster. Especially notable is the dramatically higher upload speed. I really like that. When I upload pictures or documents, it takes a long time because my Comcast upload is so limited. And I do it so infrequently, it's hard to justify paying $10 more for additional speed. But Verion's lowest cost offering blows Comcast's highest offering away too.

Verizon FIOS$199.9530Mbps5Mbps
Comcast HSI$67.956Mbps768Kbps
Comcast HSI$57.954Mbps384Kbps
Verizon FIOS$49.9515Mbps2Mbps
Verizon FIOS$39.955Mbps2Mbps

Comcast does offer $15 reductions if you also get video service but even factoring that in, Comcast is still more expensive (and slower). I don't have Comcast video service so I'm paying the full freight. Lopping off $18 from my monthly bill sounds great to me. And faster service at the same time? Bring it on!

What's the downside?
Although Comcast doesn't have the greatest reputation, neither does Verizon. They never rolled out DSL to many of their customers despite years of promises to do so. And I dropped my Verizon phone service two years ago because their prices were too high and continued to rise while my use of their product continued to sink. Clearly, the lack of competition didn't help. For example - how else could they get away with charging $7.50 a month for caller id? And their customer service stunk. The phones were supposed to work 24 hours a day but yet Verizon didn't answer their own phones 24 hours a day? Why not? Surely the demand was there.

But competition changes everything. Studies show that in communities with broadband alternatives, rates are significantly lower. Comcast will have to respond in some way. Technologically, it's going to be hard to increase speeds to match Verizon. It's my understanding that Comcast's infrastructure simply won't support those speeds without upgrading their cable plant. What's left? Slashing prices?

Extra benefits such as video email, free music downloads, etc, are worth little to most people. I don't use any of them. I don't even use Comcast for email service. High speed and low latency are all I want. Ok, a lot of people want email too but I think they'd be better off getting it elsewhere.

The bottom line
I'm not expecting all my neighbors to jump off Comcast and sign up with Verizon. But I expect enough will that Comcast will have to react. Competition is good. Verizon's entry in to the market will force Comcast to lower their prices and/or increase their performance. Improved customer service would be helpful, too.

1 comment:

Anonymous said...

There is no way that I am going to pay a cent more to verizon for their incompetence. I also dropped Verizon a year ago and I am extremely happy with paying less than $20.00 a month with Vonage. Verizon is one of the most nasty and incompetent companies and they take advantage of their clients. If you don't pay attention to your bill they will include charges which they always have an excuse to charge you for. Their phone service is overprice and their customer service below mediocre. Another fact with Verizon is that if you don't want to use their phone service to save money, they deny you other services. Unlike companies like Earthlink, that you can use another provider for your phone service, Verizon will decline internest services if you don't have telephone service with them. In other words, if they don't get you one way, they want to trap you with another. As far as I am concern I am happy with my Vonage/Earthlink services for which I pay less than $45.00 dollars a month for high speed and telephone service. With Verizon I use to pay (with less than half the services I got with Vonage)more than $50.00 a month plus taxes. No way! I will never go back to those swindlers!!