Media Money with Julia Boorstin

Verizon Ups the Ante To Compete With Cable


Verizon is being very savvy about marketing to cash-strapped consumers as we head into the holiday shopping season. Consumers who sign up for Verizon's new fiber network—FIOS—get a $150 pre-paid Visa card.

The telecom company is slashing prices and bundling more services to better compete with cable giants Comcast and Time Warner . Cable companies, satellite TV  (DTV, DISH ) and more recently Verizon and AT&T, with its U-Verse service, have been trying to snare customers with a "triple play," offering discounts if consumers sign up for four services —home phone, broadband and video.


Now Verizon is upping the ante with a "quadruple play," making its cell phone service part of the package.

Verizon is smart to put its mobile service front and center, as it has the largest wireless business in the U.S. The cable companies simply don't have a wireless service option in their arsenal, so this is a wise way for Verizon to differentiate itself. And Verizon needs to grow the number of its subscribers who have bundles, as they reduce customer turnover as much as half.

The telco needs to build on its stronghold in cell phone service right now—there's pressure to compensate for declining land-line usage. Verizon's land line revenue dropped 5.4 percent to $11.2 billion in the most recent quarter compared to a year ago.

Across the board consumers are dumping land line usage to rely only on their cell phones, or they're signing up for the digital land lines they can get through Time Warner and Comcast's "triple play" bundles.

Can deep discounting to price-sensitive consumers move the needle and help Verizon's FIOS and AT&T's U-Verse get a foothold in the pitched battle with cable giants Comcast and Time Warner? Verizon recently started running ads for "Droid" an upcoming Motorola phone that uses Google's Android operating system.

Now hooking new wireless users isn't just about their cell phone bill, it's about snagging all of their broadband and television spending. That ups the ante for the success of a new phone service-- every new customer is that much more important, and that much more valuable.

We'll be watching earnings from the telcos and cable companies as they roll out over the next few weeks, and we'll be listening carefully to hear what the CEOs say in post-earnings calls about the competitive landscape. First up are AT&T earnings on Thursday, followed by Verizon's report on Monday.

Questions?  Comments?