Will FiOS Quantum improve Verizon’s broadband service?
Must-know: Why Verizon saw a turnaround in its wireline segment (Part 4 of 12)
Verizon’s FiOS Quantum service is gaining traction among subscribers
In the previous part of this series, we discussed Verizon’s (VZ) FiOS broadband service. You saw that although Verizon has been able to gain FiOS broadband subscribers, its average Internet speed is much slower than smaller Internet service providers in the U.S.
During the conference call to announce earnings, Verizon’s management mentioned that its FiOS Quantum service is gaining traction among customers. FiOS Quantum provides high Internet speeds ranging from 50 to 500 Mbps. As the chart below shows, Quantum penetration among Verizon’s FiOS Internet subscribers has increased from 35% in 2Q13 to 55% in 2Q14.
Netflix has escalated the issue of slower Internet speeds
High Internet speeds help users stream videos without buffering—especially during peak hours. Netflix (NFLX) has time and again complained about slower Internet speeds that affects its programming quality. However, Verizon is hoping that its Quantum service should resolve these issues.
Google could become a major player in the broadband market
Google Fiber is the broadband Internet and TV initiative that Google (GOOGL) plans to roll out in 34 cities across the U.S. Google claims to provide Internet speeds of one gigabit per second (or Gbps) with this initiative. If Google is successful in its efforts, it could become a major force in the broadband Internet market.
Google could also make the market more competitive, as the impending merger of Comcast (CMCSA) and Time Warner Cable (TWC) has the potential to influence the broadband market in a big way. The combined entity would cover 60% of U.S. broadband households.
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