VERIZON'S FIOS V. DSL: BATTLE OF THE BRANDS

Competitive positioning is a tricky matter in any business. Verizon carved out a nice spot as a low-cost player in the broadband market by undercutting the cable providers on DSL pricing. Now, Verizon is going premium with a fiber optic service called FiOS for delivery of high-speed Internet, TV and DVR services. While FiOS presents a high performance alternative to cable, recent Compete analysis shows that consumers may be more interested in sticking with the norm.

In July, 25% of unique visitors (UVs) to Verizon.com clicked-through to broadband FiOS and/or DSL-related pages. A healthy 88% of UVs visiting these pages did not exhibit customer-related behavior, and looked more like new prospects rather than existing Verizon customers. Many of them actually subscribed to competitors, like Cox, Comcast, Qwest or RCN. Regional footprints play a significant role here, with Comcast having the most overlap with Verizon. 5% of Comcast’s massive online customer base considered Verizon broadband services in July. Alternatively, almost 16% of Verizon online customers considered Comcast’s broadband services. Within Verizon.com, DSL interest in general still dominates FiOS interest. In July, Verizon’s DSL-related pages saw 150% more UVs than all its FiOS-related pages combined. Remove the Verizon subscribers (who probably already have DSL), and that figure jumps to 250%.

Verizon has been offering DSL service since 2000. With FiOS they have the opportunity to strengthen their position as a premium player in the broadband market even further. 54% of visitors who entered “fios” into a search-engine clicked through to verizon.com and affiliated sites. Prospects are engaged, but to drive conversion and higher ARPUs prospects need to understand FiOS is a top-of-the-line total entertainment solution for broadband Internet, TV & DVR. As a next step, Verizon may want to reconsider the DSL/FiOS messaging on its homepage, which focuses heavily on price. Instead, differentiating the products based on value of the total package should help build FiOS’s brand as a total entertainment solution, rather than just a faster Internet connection. This could help Verizon channel interest in its products and upsell current prospects considering DSL, ultimately allowing them to capture more revenue in the growing broadband market.