Verizon’s new fiber-optic Internet and television service, FiOS, is holding down broadband prices by offering new competition to established cable providers, according to a new study.
At the same time, broadband speeds are continuing to increase, meaning consumers are getting faster Internet connections without paying more, the study found.
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The findings were released in an annual analysis of broadband speeds and prices published by Pike & Fischer, a division of the Bureau of National Affairs, a private research company based in Washington, D.C.
FiOS “has injected a new level of competition in the residential broadband market, creating a hodge-podge of discounts and other special offers across the country,” the study found. It said similar services from AT&T and Qwest Communications are having a similar effect.
“As Verizon has rolled out FiOS Internet and TV services in more and more communities, the market has seen an increasing variety of prices and data rates, as cable operators respond to FiOS launches on an increasingly market-by-market basis,” Mitchell Shapiro, a contributing analyst at Pike & Fischer, wrote in the study.
Verizon said last week that it added 303,000 new FiOS TV customers and 282,000 new FiOS Internet customers in the fourth quarter of 2008. The company said it had 1.9 million FiOS TV customers and nearly 2.5 million FiOS Internet customers by the end of last year.
Although the study did not specifically look at the Rhode Island market, the report’s editor, Scott Sleek, told PBN that competition between Verizon and Cox Communications, the state’s dominant cable provider, was likely having the same impact here.
Most cable providers nationwide price their standard broadband service between $40 and $45 per month, the study showed, but more short-term discounts are being offered to customers.
The report notes that FiOS’s prices for broadband are often as much as $10 higher than those of cable providers, though Verizon’s fiber-optic network allows for faster uploads compared with cable. Sleek said he expects to see Cox and other cable companies continue to raise their upload speeds.
In 2008, the average download speed for cable modems was between 10 and 15 megabits per second (Mbps), compared with 3 Mbps in 2004. Most FiOS packages offer download speeds of 10 or 20 Mbps.
