Verizon saw the ongoing trend of its Fios broadband subscriber base expansion continuing in the first quarter of 2021 as its video base continued to dwindle.
During the quarter, the telco added 98,000 consumer Fios Internet net additions, up from 59,000 Consumer Fios Internet net additions in first-quarter 2020. Total consumer revenue of $22.8 billion, up 4.7 percent year over year.
Verizon had a total of 102,000 total Fios Internet net additions, the most first quarter total Fios Internet net additions since 2015.
Matt Ellis, CFO of Verizon, said the overall growth strong growth in Fios “reflects both the quality of the product, as well as the positive sentiment around our Mix & Match home pricing structure, which provides our customers with unmatched simplicity and optionality.”
Amidst ongoing DSL broadband subscriber losses, Verizon added a total of 66,000 total residential broadband connections, up from a gain of 31,000 a year earlier. Verizon ended the quarter with 6.71 million total broadband connections.
Verizon ended the first quarter of 2021 with 13.29 million total Fios digital connections, down 1.9% from 13.55 million in the year-ago quarter.
However, Verizon’s consumer Fios video segment continues to be a drain as the telco lost 82,000 Fios Video net subscribers in the quarter.
Ellis said the video losses reflect “the ongoing shift from traditional linear video to over-the-top offerings.”
Regardless of the video losses, Ellis said “strong internet volumes drove the 2.2 percent increase in consumer Fios revenue to $2.9 billion.”
“While we continue to experience revenue, pressure associated with secular video trends, our broadband subscriber growth, combined with a shift up in speed tiers, more than offset that pressure and will continue to drive solid revenue performance for us,” Ellis said.
Speeds, Choice Drive Growth
A big factor in Verizon’s first quarter Fios internet growth was the introduction of the Mix and Match program that was introduced in the first quarter of 2020 and the ability to move up to 1 Gbps speeds.
This program allows Fios consumers to mix and match any internet and TV plan to suit their unique needs with no annual contract. With mix and match, a Fios customer can change their Fios plan every month, without any penalties.
Additionally, Verizon waived additional costs such as surcharges, broadcast and regional sport network fees.
Ellis said that while the immediate benefit was interrupted by the pandemic, it still had “three quarters of very strong volumes starting in third quarter last year, fourth quarter and now again in the first quarter here.”
He added that the “strong volumes based of the quality of service, combined with bringing the Mix & Match there, has worked very well for us in consumer mobility, now working well for us in Fios.”
Given the success that Verizon has had with the Mix and Match program, Verizon is applying it to its SMB wireless plans.
“We brought the Mix & Match construct into our SMB wireless offerings as well,” Ellis said. “So, we’re very excited about what that’s going to do.”
While fiber is certainly the cornerstone of Verizon’s Fios deployment, the telco continues to see opportunities to apply it to other parts of its business, including its wireless network and for enterprise customers.
Business segment revenues were $7.8 billion, up 1.3 percent year over year, which Verizon said was the highest rate of growth since the company’s new operating structure was introduced in 2019. Verizon noted that strong wireless service growth offset secular pressure in wireline.
Under Verizon’s One Fiber initiative, the telco has deployed over 42,000 route miles of fiber. This fiber network forms the backbone of the provider’s Intelligent Edge Network.
Ellis said Verizon’s fiber build strategy is all “about building the network once and then monetizing it different ways.”
“Just as we talk about with wireless and 5G monetizing in different ways, with the fiber we have the same opportunity, too. So, as you’re lighting up those cell sites, when you go past an enterprise building, the opportunity to go in there and have more customers or enterprise customers on net rather than paying third-party access absolutely is an opportunity for us to create incremental return on that investment in fiber.”
On the enterprise business side, Verizon has deep penetration into large business buildings in the U.S. According to Vertical Systems Group’s 2020 U.S. Fiber Lit Buildings LEADERBOARD, has the second largest amount of on-net fiber building connections, trailing only AT&T.
The eleven retail and wholesale fiber providers on VSG’s on-net fiber leaderboard qualify for this benchmark with 15,000 or more on-net U.S. fiber lit commercial buildings as of year-end 2020. VSG defines a fiber lit building is defined as a commercial site or data center that has on-net optical fiber connectivity to a network provider’s infrastructure, plus active service termination equipment onsite.
Rosemary Cochran, principal of Vertical Systems Group, said in a release that service providers that have large on-net fiber footprints could extend their facilities to two other types of buildings: those that don’t have any fiber in them today and others that only have one provider present.
“As the economy rebounds in 2021, fiber providers have opportunities to monetize the millions of small and medium U.S. commercial buildings without fiber, as well as larger multi-tenant buildings with only a single fiber provider,” she said. “However, it remains uncertain how changes in U.S. regulatory policies and federal funding could alter fiber investments and deployment plans in the next several years.”
(Make sure to keep on top of the top broadband providers’ broadband performance in the first quarter. Check out Broadband Communities’ earnings page From AT&T to Verizon: Sizing up Q1 Broadband 2021 Earnings)