The company joins forces with DirecTV to offer phone, Internet and TV services in Florida.
By LOUIS HAU
Published March 30, 2004
Call it The Phone Empire Strikes Back.
Verizon Communications, which already markets phone, high-speed Internet and wireless services in Pinellas, Hillsborough and Pasco counties, has now added the one weapon it lacked in its expanding battle with cable TV carriers: cable TV channels.
On Monday, Verizon joined forces with satellite carrier DirecTV to offer discounted bundled packages of phone, Internet and TV services in its Florida and Texas territories. The two companies already were selling the packages in New York, Connecticut, Massachusetts, Maine, New Hampshire, Vermont and Rhode Island and plan to roll them out in all of Verizon's markets by the end of the year.
Not that it's necessarily a great deal for everyone: The savings total $2 to $6 a month and are available only to customers who purchase local phone service as part of a discounted package, such as those that include extra calling features or long-distance service.
At the same time, DirecTV is offering a separate discount of $10 a month for six months for new customers who request satellite service by July 17.
Still, it is part of an industry-wide trend that turns up the heat in the competition between phone companies and cable companies. "It was something we always wanted to do," said Mark Adams, Verizon's executive director for consumer markets. "We felt (TV) was a component that absolutely had to be in our consumer bundles."
DirecTV senior communications director Bob Marsocci was similarly bullish on the partnership."It makes both of us even more formidable competitors to the cable companies," he said.
Verizon is the last regional "Baby Bell" phone company to pair up with DirecTV or Dish Network, the two big satellite TV carriers. For example, BellSouth Corp., which serves most of Hernando County and a small portion of Pasco County, signed a marketing deal last year with DirecTV. The companies plan to launch bundled packages around midyear.
At the same time, cable TV companies have begun offering phone services to their customers. Knology Inc., the West Point, Ga., company that bought Verizon's Americast cable operations in Pinellas County in December, already offers phone services in its other service territories and plans to do so in Pinellas later this year.
Cable carriers currently dominate the growing market for residential broadband services, which offer fast Internet connections. Phone-satellite partnerships are particularly important for phone companies because "video has been one of the critical legs of the stool to get and keep broadband customers," said Nancy Kaplan, vice president and telecommunications analyst for Adventis Corp. of Boston.
"They need to do something immediately because cable is threatening to capture the customer now," Kaplan said. "If cable comes out with telephony and they're offering (broadband services) and they're offering video - and the phone company can only offer two of those - the phone company is in danger of losing the customer."
Verizon's Adams agreed that customer retention was a big motivation to link-up with DirecTV. Bundled packages are good for customers not only because of their discounted prices but also because their charges all show up on one bill, Adams said. Verizon and DirecTV hope to offer consolidated billing later this year.
Customers who buy bundled packages "are more "sticky,"' Adams said. "The more experience they have with us, the less likely they are go to with someone else."
While Verizon doesn't yet offer its customers in Florida a discounted bundle that includes Verizon Wireless, the company is hoping to include cell phone service in its bundles in the near future, Adams said.
Eventually, improvements to phone networks and the emergence of Internet phone services could make it possible for Verizon and other regional phone companies to offer video without a satellite provider, Kaplan said.
"Right now, we're looking at DirecTV," Adams said, "but I know the company is (also) looking at other options."
- Louis Hau can be reached at hau@sptimes.com or 813226-3404.
