Verizon Communications Inc. (VZ:US), the second-largest U.S. phone company, introduced an Internet service called FiOS Quantum that doubles its broadband speed while increasing prices.
Verizon, seeking an edge against cable providers, is emphasizing faster connections as part of new FiOS bundles of Internet, television and phone service. The offerings are aimed at users with multiple Internet devices and bandwidth-hogging applications, who may pay more for speed.
Beginning today, customers can pick from five speeds. The basic 15-megabit-per-second rate will carry the same price of $99 a month for triple play, which includes phone and television service. The plans will top out at 300 megabits per second for an Internet-only service that costs $204.99 a month with a two- year contract, according to a statement.
“Verizon has the choice of lowering prices or increasing speeds, and they are certainly not interested in cutting prices,” said Roger Entner, an analyst with Recon Analytics LLC in Dedham, Massachusetts.
The previous 25-megabit-per-second FiOS triple-play bundle that cost $94.99 will be replaced with a 50-megabit package for $109.99, said Bill Kula, a spokesman for New York-based Verizon. The $109.99-a-month 35-megabit plan will become 75 megabits for $114.99 a month, he said.
Comcast Corp. (CMCSA:US), the largest U.S. cable provider, offers rates of as much as 105 megabits for $199.95 a month, according to the company’s website. Cablevision Systems Corp. (CVC:US), the fifth- largest cable carrier, offers speeds of 50 megabits, with an “ultra” package that boosts it to 101 megabits, for $104.95.
“We think the speed will attract more people since competitors don’t have comparable speeds at these prices,” said Arturo Picicci, the director of product management for FiOS.
Verizon shares rose less than one percent to close at $43.82 in New York. The stock has climbed 9.2 percent this year.
Most home Internet customers won’t see much benefit from the fastest speeds, said Jonathan Atkin, an analyst with RBC Capital Markets in New York.
“Once you get beyond 25 to 50 megabits, it’s all marketing,” Atkin said last month when Verizon first announced the new FiOS speeds.
Picicci disagrees, saying the increased number of Internet- connected devices and the growing availability of higher- definition video and games have changed the market.
“Getting over 50 megabits is important for families who have a lot of devices,” Picicci said. “It’s all about options and having choices.”
The faster speeds also may help improve the reputation of Verizon’s underlying technology, Entner said.
“They may be seen as having a better network,” he said.
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