Verizon gains, at high speeds
A rapidly growing market of bay area Internet customers is the focus of a fierce competition with Bright House Networks.
By DAVE GUSSOW
Published June 20, 2006
In the battle to be No. 1 in entertainment and communications in the Tampa Bay region, Bright House Networks and Verizon Communications have been loudly duking it out over TV and phone services.
They’re also battling for customers who want Internet access. Verizon, citing a new study by comScore Networks, says that it has overtaken Bright House as the dominant high-speed Internet provider in the region.
“It’s a competitive marketplace,’’ Verizon spokesman Bob Elek said. “And for too long, we’ve been perceived as running behind the curve with Bright House. This is an important measurement to get out there for people to understand.”
According to the data compiled by comScore, Bright House, the dominant cable operator in the region, held 53 percent of the market in the first quarter of 2005 to Verizon’s 33 percent. In what amounts to a dramatic turnaround, by the first quarter of this year, Verizon, the dominant phone company, was leading Bright House 50 percent to 37 percent.
What appears to be driving the rise of DSL in the Tampa Bay area is Verizon’s aggressive pricing of its Internet service at a time of heavy consumer demand.
Bright House declined to comment specifically on the comScore report because it had not seen it, said spokesman Joe Durkin. But Bright House says it had a record year for high-speed sign-ups in 2005 and the trend has continued this year.
“We don’t know where a lot of these new customers are coming from,” Durkin said. “What we do know is that more than a quarter-million people (have signed up for phone service). We have a good idea where they’ve come from.”
More than bragging rights are at stake. Both companies want to sew up customers for all three services — phone, TV and high-speed Internet -—and have been invading each other’s traditional turf.
DSL or “digital subscriber lines” carry data at high speeds over standard telephone wires. Cable companies compete by providing similar high-speed access over dedicated cable lines.
Verizon slowly began rolling out TV service in select areas in December, claiming about a 17 percent share within months of its startup. Bright House has been offering phone service for two years.
Experts expect DSL or “digital subscriber line” service from phone companies to eventually surpass cable offerings, but they disagree on the timing. A survey released in March by the Pew Internet & American Life Project showed DSL from phone companies already leading cable access 50 percent to 41 percent. But a report this week from JupiterResearch predicts 2010 will be the year DSL overtakes cable.
“While the Jupiter projection is off in the distance, (the transition is) not going to happen all at once,” Elek said. “It will happen market by market and in the Tampa market, we are seeing that now.”
Responded Durkin: “Everyone’s boat is rising because people are switching from dialup to broadband service.”
Price appears to be a key component for consumers. Telephone companies have been particularly eager to cut prices, with Verizon offering an entry-level DSL service (not just an introductory offer) for $14.99 a month. Bright House offers a service called Road Runner Lite, which is slower than its regular service but less expensive.
According to Pew, overall broadband costs fell from an average of $39 in 2004 to $36 in the March survey. DSL, in particular, dropped from $38 to $32, while cable remained stable at $41. With more people switching from low-cost and slower dialup connections, those differences have become increasingly important.
“The higher income people chose cable,” said Bruce Leichtman, president and principal analyst at Leichtman Research Group in Durham, N.H. “DSL has had an impact on price-conscious consumers.”
But Leichtman is skeptical that Verizon turned the market around so quickly. To accomplish it, Leichtman says, it would have required massive carrier switching or DSL getting almost all the new high-speed customers, both of which he doubts.
“I could potentially see (such a turnaround) in a rural area where a cable operation is weak,” Leichtman said. “You have a strong cable operator there with one of the highest broadband penetrations in the country.”
Overall, DSL growth outpaced cable over the last six quarters, he says, but cable still holds a commanding lead in his research.
“The fact is both are doing very well,” Leichtman said.
Dave Gussow can be reached at firstname.lastname@example.org or (727) 445-4165. His blog is at www.sptimes.com/blogs/tech.
[Last modified June 25, 2006, 11:40:23]
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