Saturday, August 27, 2011

Verizon misses on price points for higher tier FiOS service

There are four key elements to a successful business offering: product, price, promotion and distribution channel. When it comes to the high end of its FiOS fiber to the premises (FTTP) Internet service, Verizon has most but not all of those elements.

The missing element? Price. At $200 a month for service providing downstream connectivity of 150 Mbit/s and 35 Mbit/s on the upside, "nobody's buying," reports Kathy Brown, Verizon's senior vice president for public policy according to this Light Reading story. Even in university towns, where Aspen Institute fellow and former government broadband policy guru Blair Levin wants to explore bringing gigabit service through his Gig.U project. Consumers, Brown notes, instead opt for cheaper service tiers providing connectivity at lower speeds.

Of course few are interested in buying Verizon's higher end service at $200 a month. That's an unacceptable price for most consumers. It's also an expected consequence of telco marketing strategy that rations bandwidth, creating an economic disincentive for customers to use more. Products and services cannot be successful when price points are set unrealistically high. It is also pointless to blame consumers for not buying when they are.

 
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