Competitor Environment

A. Future Objectives :

Competitors are clashing against each other even more to increase the

number of subscribers. Companies like Verizon, Comcast, Charter

Communications, Cox and AT & T are coming up with wonderful innovative

ideas to provide customers with a very cheap price, fast internet connections,

clear phone lines and great TV services. Consumers and communities they

live in are going to be the final winners of this competition. Verizon and

Comcast are one of the major competitors eager to give their service to

consumers. Verizon has been working on installing fiber-optic network around

communities which will be able to provide high speed internet and TV

services to the subscribers in a cheaper price. Verizon spokesman Phil

Santoro says that so much more can be done on optical fiber. He also says

that Verizon can leapfrog the incumbent cable companies, steal their

customers and give them more and better service (Kirk -2008).

Comcast offers all three services i.e., phone service, TV service and internet

service together. Verizon also offers all three services. But its TV service

comes from DirecTV which is an independent satellite TV operation and is not

a part of Verizon. Verizon’s copper phone wire can only provide phone service

and high speed internet. Verizon is depending on the FiOS (Fiber Optic

Service) system to compete with Comcast. This new system will be able to

carry 100 megabytes of data per second and will be twenty times as fast as a

typical cable line (Sullivan – 2006).

 Verizon is spending approximately $23 billion on fiber-optic network in

thousands of communities in 16 states around the country. The key service

that Verizon offers is FiOS TV which is a multichannel video service which

competes directly with incumbent cable operators’ offers. Other cable

companies such as Comcast, Cox, Adelphia and Time Warner are raising cable

modem speeds to compete with FiOS. Competitors are feeling the threat of

competition from FiOS and thus, are forcing the cable operators to devote

their time and money in developing new cable modem technologies. Future

objectives of the competitors will be to compete more vigorously on multi

product bundle offers as well (Barnett – 2007).

B. Current Strategy :

Verizon, Comcast, Cox, Charter Communications, Time Warner and AT & T

also have sufficient financial resources and experience to compete in the

market phone, internet, TV and wireless services. Comcast provides phone,

TV and internet services. Verizon also have these three services with an

additional service of wireless phone service. With the combination of these

four services the customers can have one simple monthly bill (Verizon –

2008). Verizon and Comcast especially are battling for customers with low

introductory rates for the bundled services. For the first twelve months

Comcast offers all three services for $99 which might rise to $130 or more

after that depending upon the type of service. The introductory rate of

Verizon is $104.99 and can be locked for one or two years, or not locked at all
according to Verizon spokesman Phil Santoro (Kirk – 2008). For promotional

strategy, Verizon is offering free movie on demand to download in

Massachusetts.

Verizon even offered free TVs to first-time subscribers at one point. It is a

great strategy to attract the customers. FiOS is the major current strategy for

Verizon. They are slowly installing this fiber-optic network capable of

providing TV, telephone services and high-speed Internet to millions of

customers. In Massachusetts, Comcast had 1.65 million subscribers by the

end of last year, which is around 11,000 subscribers less than the previous

year. In the same area Verizon had 78,406 subscribers in 61 cities and towns

which is an increase in the subscribers by 11,982 from the year before. This

year Verizon plans to spend $200 million to bring FiOS to 53 more

communities (Kirk – 2008). Multichannel video service, FiOS TV, is one of the

key services provided by Verizon over FiOS. It competes directly with other

cable operators’ current offers. FiOS TV is a very innovative service over

present cable offers. With $23 billion investment in FiOS it will make a good

business sense for Verizon to compete for voice, video and broadband

services (Barnett – 2007).

Other cable operators such as Cablevision and Comcast have pressured

landlords to exclude wirelinecompetitors. A survey of property owners in the

areas in Tampa, Florida conducted by Verizon employees found that almost

42 % of the areas were covered by exclusive contracts. Comcast has obtained

exclusive agreements in the Washington, D.C. metropolitan area which gives

 them the exclusive right and license to construct, install, operate and

maintain multi-channel video distribution facilities unless required by law

(Barnett – 2007).

C. Assumptions:

Due to intensified competition the lines between the cable companies and

telecom companies are getting blur as they invade each other’s area to gain

more customers. Comcast has increased its customer base with the

popularity of its triple play bundle. But companies like Verizon and AT&T are

fighting back. It is very likely that we will soon see a quadruple play bundle.

By the end of 2008 AT&T estimates that its U-Verse service will reach 17

million homes and by the end of 2010 the service will reach to 30 million

homes (Seeking Alpha – 2008).

According to Dallas Clement, senior vice president of strategy and

development for Cox, the other cable companies are not loosing too many

customers because of the Verizon’s FiOS. He believes that Verizon has

invested too much money in FiOS and doubts if they can see a return on this

(Wilkerson – 2008). Marc Goodman, Comcast spokesman, says that his

company isn’t worried much about Verizon because of the competitors that

already exists in this sector. He claims that Comcast has strong and steady

customer base with more than 1.6 million in 2007. According to him Comcast

also has fiber optic cables in most areas and their download speed is as fast

as Verizon’s (Kirk – 2008).

 References

Kirk, B. (2008). Clash of the cable titans: Verizon slowly growing on Comcast’s turf.
Retrieved on June 12, 2008 from The Eagle Tribune online:
http://www.eagletribune.com/punews/local_story_109204906.html

Sullivan, J. (2006). Melrose battleground for bundled services. Retrieved on June 12,
2008 from The Melrose Mirror:
http://melrosemirror.media.mit.edu/servlet/pluto?state=3030347061676530303757
65625061676530303269643030353132353534

Barnett, T. O. (2007). Voice, Video and Broadband: The Changing Competitive

Landscape and Its Impact on Consumers. Retrieved on June 14, 2008 from
DEPARTMENT OF JESTICE, Antitrust Division:
http://www.usdoj.gov/atr/public/workshops/telecom2007/submissions/228010.htm#
10

Verizon (2007). Verizon Bundles. Retrieved on June 14, 2008 from Verizon:
http://www22.verizon.com/Residential/VZPackages/

Seeking Alpha (2008). Comcast Sees Increased Competition in Multi-Media

Bundling. Retrieved on June 12, 2008 from Seeking Alpha:
http://seekingalpha.com/article/76684-comcast-sees-increased-competition-in-multi-
media-bundling
Wilkerson, D. B. (2008). Cox exec: Cable due for some recognition. Retrieved on
June 14, 2008 from Market Watch:
http://www.marketwatch.com/news/story/cable-tvs-due-some-
recognition/story.aspx?guid=%7BF9B2FE22%2D2636%2D4ECB%2DBD2A%2DCBE4
364892C3%7D&dist=FSQ