In addition to announcing new shared data plans
and the death of unlimited wireless, Verizon CFO Fran Shammo this week also announced that FiOS customers can expect a new slate of price hikes soon
. Speaking at the JP Morgan investor conference this week, Shammo stated that the service's high rankings of late (FiOS recently came out tops in both Consumer Reports
and ACSI rankings
) means that the company feels it can charge a premium for the service, and start doing away with some of the more aggressive pricing promotions:
"I think you're seeing a little bit of pullback on those promotional-type items and the aggressiveness that we have in the marketplace," he said. He went onto say that strong customer satisfaction for the Fios TV product means that the company can charge more for the service. "Given the Consumer Reports article and the Consumer Index article, I think we can be less aggressive," he said. "Word-of-mouth is the best advertising we can get."
"You'll see us do some price increases here over the next two quarters to offset the content increase," Shammo said. "And that will also contribute more profitability to the bottom line...We are switching around our bundles and the customers that are coming out of the current bundles will be priced up to the newer bundles. So you are going to see really a shift over the next two to three quarters in price-ups coming out of FiOS." Shammo said that the company will increase fees on rental charges for set-top boxes and digital converters.
Granted, the fact that FiOS operates in a duopoly (and barely that sometimes) has more to do with the fact Shammo can hit consumers with new rates than the quality of the company's service. While the FiOS service itself sees high marks, the same Consumer Reports study Shammo cites notes that the company continues to struggle when it comes to billing users accurately.
It's also worth recalling that when Verizon got into the TV business, their lobbyists pushed a lot of state-level franchise laws (some of them awful
wishlist laws that eroded consumer protections) with the promise that Verizon's entry into the market would lower television prices.