Is Verizon (VZ) Zero-Rating Its Data On FiOS Mobile App?

U.S. telecom behemoth Verizon Communications Inc. VZ has come up with some exciting plans for its wireless customers. The company has decided to offer free data for FiOS cable TV service to all Verizon Wireless customers.

This implies that anyone who uses Verizon’s wireless mobile data plan and FiOS internet and cable TV plan is eligible to stream live channels and on-demand shows through the updated FiOS Mobile app, with unlimited data. (Verizon Wireless and Verizon FiOS are two separate subsidiaries under Verizon Communications).The announcement comes on the back of Verizon’s previous decision to zero rate its Go90 mobile app for its own wireless customers.

The FiOS Mobile app allows streaming of over 140 live channels, access to recorded DVR (digital video recorder) shows and movies while on the go. It also gives access to thousands of on demand titles.

The practice of zero-rating data (offering free mobile video streaming data) has been quite popular in recent years in the media industry.

As part of the promotion, Verizon is also offering cash back of upto $500 for those who simultaneously signs up for both Verizon FiOS and Verizon Unlimited plans. FiOS customers in greater New York City, New Jersey, Philadelphia, Richmond, Hampton Roads and Boston will enjoy the new 750 Mbps Instant Internet service.

Verizon’s FiOS Prepaid

Recently, Verizon also publicized that it will offer its Fiber Optic Service or FiOS as a prepaid plan called FiOS Prepaid. Verizon FiOS is basically a bundled service that includes access to Internet, telephone and television over a fiber-optic communications network with over five million customers in nine U.S. states. Verizon’s FiOS Prepaid comes in the form of contract-free and credit-check-free or deposit-free means to avail the trio of Verizon’s FiOS services. This is the first ‘triple-play’ prepaid FiOS option from Verizon, and gives regular service with less restrictions to those who can’t or won’t get it. The service is likely to be available anywhere the regular FiOS plans are offered.

The prepaid subscription will start at $60 per month including a Wi-Fi router, which gives access to 25Mbps Internet service. The charges will vary with the type of package chosen. The installation fee is $90. However, a free self-installation option will also be available.

Winding Up

Verizon’s FiOS services are doing considerably well as evident from the last reported results. At the end of 2016, FiOS video subscriber base was 4.694 million (up 1.3% year over year), FiOS Internet subscriber count was 5.653 million (up 4.3%) and FiOS digital voice residence connections totaled 3.895 million (up 0.6%). During the quarter, Verizon gained 21,000 FiOS video subscribers, 68,000 FiOS Internet customers and 13,000 FiOS digital voice residential connections.

The new prepaid option is nothing but a promotional scheme to lure more customers by making FiOS attractive. This aggressive push for new subscribers may be Verizon's way of laying the groundwork for its next-generation FiOS IPTV service.

Verizon may be trying to stay competitive by marketing a prepaid service. With the major players of the cable industry such as Comcast Corp. CMCSA and Charter Communications Inc. CHTR pulling off subscribers, and increasing pressure from online streaming video providers such as Netfix NFLX, the telco needs something new to stand out in the crowd.

The latest zero-rating practices will however pose severe threats to the online streaming video providers such as Netfix.

We look forward to seeing how this new prepaid and free mobile data offering influences the stock’s price performance, growth and financials, especially subscriber count in the ongoing first quarter of 2017 and also in the future.

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