Broadband Cable Association of Pennsylvania

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June 18, 2012

Verizon Communications Inc. is raising prices as it doubles Internet speeds with FiOS Quantum, a new offer debuting the company's fastest Web service to date.

Verizon, the second-largest U.S. phone company, is emphasizing faster speeds as part of its new FiOS broadband Internet, television and phone service bundles as it seeks an edge against cable providers. The higher-speed offerings also come with higher prices aimed at users with multiple Internet devices and more bandwidth-hogging applications.

Verizon, based in New York, says that beginning on June 18 customers can pick from five speeds starting at 15 megabits per second, which remains the same price at $99 a month for triple play, and topping out at 300 megabits per second for an Internet-only service for $204.99 with a two-year contract, according to a statement.

"Verizon has the choice of lowering prices or increasing speeds, and they are certainly not interested in cutting prices," said Roger Entner, an analyst with Recon Analytics LLC in Dedham, Massachusetts, in a telephone interview.

The previous 25 megabits per second FiOS triple play bundle offered online for $94.99 is replaced with a 50 megabit package for $109.99, Bill Kula, a Verizon spokesman, said in a telephone interview. The $109.99 a month 35 megabit plan is now 75 megabits for $114.99 a month, he said.

Comcast, Cablevision

Comcast Corp., the largest U.S. cable provider, offers as much as 105 megabits, which is $199.95 a month, according to the company's website. Cablevision Systems Corp., the fifth-largest cable carrier, offers speeds of as much as 50 megabits, with an "ultra" package that boosts it to 101 megabits, for $104.95.

"We think the speed will attract more people since competitors don't have comparable speeds at these prices," said Arturo Picicci, Verizon director of product management for FiOS, in a telephone interview.

When Verizon announced the new speeds for FiOS last month Jonathan Atkin, an analyst with RBC Capital Markets in New York, said most home Internet customer wouldn’t notice the difference.

"Once you get beyond 25 to 50 megabits, it's all marketing," said Atkin.

While that used to be true, the increased number of Internet connected devices at home and the growing availability of higher-definition video and games over the Internet has changed the market, Picicci said.

"Getting over 50 megabits is important for families who have a lot of devices. It's all about options and having choices," said Picicci.

Verizon's position is that this may enhance their image, said Entner. "This reinforces that message, so they may be seen as having a better network," he said. - Bloomberg

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