Verizon FiOS IMC Paper

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Integrated Marketing Communications project, creating a new marketing plan for Verizon FiOS. Credit to Nicole Spiros, Frank Pirog, Xiao Xiao Yu, and Young Lee

Integrated Marketing Communications project, creating a new marketing plan for Verizon FiOS. Credit to Nicole Spiros, Frank Pirog, Xiao Xiao Yu, and Young Lee

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  • 1. David BenBassettNicole SpirosYoung LeeXiao Xiao YuFrank Pirog
  • 2. Table of ContentsExecutive Summary…………………………………………………………………………………………………………………3Situation Analysis……………………………………………………………………………………………………………………7Recommendations……………………………………………………………………………………………………………..…16Rejected Alternatives……………………………………………………………………………………………………………26Exhibits…………………………………………………………………………………………………………………………………27Works Cited………………………………………………………………………………………………………………………….48 2
  • 3. Executive Summary 3
  • 4. Cable TV is a huge part of American entertainment. 99% of the population in the UnitedStates has a television set and a large portion of those households receive cable service. Cablestarted in the 1970’s offering about 20 channels. Since then it has evolved, offering hundreds ofchannels worldwide. Verizon FiOS is a large enough company to impact in the cable industry however it is byno means the leader. There are numerous others like Verizon that provide cable service tohouseholds in the United States; Time Warner, Direct TV, and Cox all have qualities, unique andsimilar that are used as selling points. Cable companies generally target anyone with the capacity to watch and enjoytelevision. The differences lie in the plans and special features each company provides. Verizonfor example has new, cutting edge technology, FiOS. FiOS is offered as a bundle that combinestelevision, phone, and Internet service otherwise known as a triple play. Verizon targets families and young adults, aged 18-34. Ours is an age group that lovesthe latest trends and innovative ways of making communication more effective. The cableindustry as a whole is made of very similar companies, so each must find ways to innovate andnarrow their markets to boost sales. Verizon FiOS has been on the market now for almost six years. Introduced in 2005, theservice was the first to bring digital cable to homes via fiber optic cables that supply data muchfaster than other types of cable. Other providers such as Comcast and DirecTV have been in themarket for a few more years but have continued to remain as big players. The cable provider industry is growing according to Ibis World. Though the idea of cableservice is mature, Verizon and other providers have moved the industry out of its mature phaseby staying up to date and adopting new technologies. Along with that, the industry stays fresh 4
  • 5. with ever-changing packaged deals involving channel selection, television features, phoneservice, and Internet. Although Comcast has the most market share, FiOS is not far behind. Thanks to its risingpopularity, more than 3.2 million subscribers now use FiOS, representing a near 26%penetration rate nationwide (Kula). Bill Kula states that, “as the now seventh largest videoprovider in the nation, we keep adding new channels, more video on demand and HD contentand interactive features that drive our competitors crazy.” Other brands aren’t the only one’s innovating. In an effort to stay competitive, Comcasthas created a new service called Xfinity. With this new service came an expansion of thecompany’s Fancast service: a huge selection of on-demand videos that can be played from yourTV, computer or mobile device. Over 3,000 hours of that programming is also in HD. Besidesbeing able to access their site, you can also log into sites for cable networks like TBS and TNTusing the same login credentials (TechnoBuffalo). In terms of advertising, Verizons introduce their FiOS TV and promote its Triple Playbundles when it comes to pricing. FiOS is advertised in a package that includes Internet, TV, andphone services in one bill. Print ads tend to be simple and generally aim to inform the consumerabout the price of their services and the available options. Advertisements from competitors are much more dynamic than Verizon’s. Comcastplays on its least expensive plan to draw in the consumer. They also use clever visuals andminimal text so that consumers are not overwhelmed. Direct TV plays off of professional sportsto draw people into their HDTV upgrade and sports packages, which are targeted towards themale demographic. Time Warner follows the same format, making sports the main attraction oftheir ads. All the ads have pictures of a sport and below, a description of their packages andservices. Like Verizon, all of these players offer a telephone, Internet, and TV package. 5
  • 6. Growth in advertising has decreased, but the cable industry is thriving, and is projectedto continue growing in the future. As the economy continues to improve, unemploymentdecreases and people get more disposable income to spend. The cable industry is highlycompetitive consisting of 2,919 enterprises, mostly small and local (IBIS World). The industry isvery sensitive to fluctuations in the economy because most people do not consider cable anecessity and older consumers consider services a commodity (Mintel). Also, tough economictimes mean reduced advertising expenditures by sponsors, which cable companies rely on forrevenue. The industry always has to be on the forefront of technology and adapting their servicesto include new innovations. The actual growth in new subscribers to basic cable is droppingbecause the market has been highly penetrated, but there has been significant growth fromcurrent customers switching to new digital cable and satellite services. Many companies have existed in this market for a long time, the big three now beingComcast, Verizon, and Time Warner Cable, etc. Once a consumer chooses a cable company, it ishard for them to stop the current service or switch to another company, so winning customersentering the market is a priority. Our goal is to ultimately increase FiOS’ market share and helpgain Verizon a competitive advantage through integrated marketing. 6
  • 7. Situation Analysis 7
  • 8. Advertising Landscape The top three competitors for Verizon FiOS are Comcast, Direct TV, and Time Warner. Itis clear that the advertising strategy in the industry involves trying to convey a message aboutthe attributes and pricing packages of each company’s television service. Informational messages of the competitors follow a very similar structure for deliveringtheir message. Their messages explicitly draw firm conclusions; they do not rely on theirreceivers to draw their own conclusions because explicit conclusions make it easier for people tounderstand and retain the message (Belch). Because there is high competition in the television service industry they use one-sidedmessages so that the receivers are only informed about their positive attributes and benefits(Belch). All of the competitors use both verbal and visual messages, but the message is morestrongly represented by the verbal elements of the ads. Ads will verbally describe the pricingmodels for the services and what those services provide while Visual messages mainlysupplement the former. For example, DirectTV uses pictures of sports icons like Eli Manning toappear in their advertisements for sports packages. Elis presence is only used to supplementthe verbal information about the sports package for DirectTV. Comcast, DirectTV, and Time Warner mix humor in with their appeals toward therational, logical aspect of the consumers decision-making process. The way a few of them dothis is through comparative advertising. For example, Comcast directly names Verizon in itsadvertisements and vice-versa. Comcast will point out negative attributes and about Verizonsservice and then say why they are better. While this message appeal can catch attention, itseffectiveness is questionable. Since comparative advertising has been overused it can affect thecredibility of the company trying to utilize it (Belch). 8
  • 9. Consumer Behavior Consumers in the cable market behave very differently based on age and income andgenerational beliefs about technology greatly effect purchase decisions (Ad Age). According to aMintel report, 85% of households in America have some sort of television service, be it FiOS,Xfinity, DirecTV, etc. An essential difference between groups is the perception of cable as acommodity. Under age 45, consumers tend to be more interested in the differences betweenproviders such as speed and picture quality, DVR capabilities, and bundling. Users over 45however, report that they are less likely to ever make use of those features and thus considerprice the main differentiator. The same follows for consumers of different income levels; higherincome users are more interested in early adoption of new technology and view the service lessas a commodity (Mintel). It is important to note, that 82% of people within the report stated that they only watchTV during original or rerun broadcasting, and that makes up about 15.6 of their viewing hours.This means that at present, the majority of consumers don’t frequently use added features likeDVR (Mintel). With 43% of pay-tv users stating that they watched TV through DVR, the feature isbecoming more and more important which reflects increasingly busy lifestyles. This statisticskews towards younger consumers and illustrates their value of convenience (Mintel). A major concern of cable providers is customer switch rates and we have some databehind the behaviors. With companies constantly vying for market share this data is importantfor strategic planning. Consumers under 45 or those with an income upwards of $75k are themost likely to switch services within the next six months. This is due to these groups’ desire tobe on the forefront of technology (Mintel). FiOS is doing well here since their fiber optictechnology is cutting edge at the moment. However based on the rate technology advances, this 9
  • 10. could change within a year. For most consumers, the main reasons for switching are price andcustomer service (Mintel). On a macro level, the pay-tv market is growing, though slowly due to the stagnatedhousing market and emergence of cheap online content (IBIS). The market is currentlygenerating about $91.1 billion. Aside from the competition between traditional cable service providers andtelecommunications companies like Verizon, the industry also faces pressure from online videoproviders like YouTube and Hulu (IBIS). The Internet has not made a substantial impact on theindustry however because as previously stated the majority of viewers still would rather viewtelevision on TV and most of the providers in the industry bundle Internet in with their televisionanyway (Mintel). Companies maintain revenue growth through the use of promotions. Thoughpromotional pricing and offering free extra services causes short-term losses, after the first yearservice charges increase and losses are recouped (Mintel). Currently, free DVR offered initially isa popular promotion among companies. Companies also tend to tier their price points tocapture as many consumers as they can, offering more or less features for an appropriate price(Mintel). Bundling is also used within the industry as an attractor to customers who want tosimplify their billing. According to Mintel, 33% of consumers like the provider for all of theirservices.Positioning Verizon FiOS plays in a very volatile and competitive market. It is difficult to stand out inmarkets where the product differentiation is not always understood to everyday consumers orwhen that same product serves masses of consumers. Though there are many obstacles and 10
  • 11. difficulties in this market Verizon uses a very creative approach in it’s positioning in an attemptto stand out from the competition. Instead of just sticking to one positioning strategy, Verizonseems to have a combination of strategies that helps beat out its competitors. Verizon FiOS is different from many cable companies such as Cox and Comcast who tryto focus on the local community feel. Verizon is not a “cable company”, but rather atelecommunications brand that provides cable. Many cable companies such as Comcast and Coxhave to distribute local news, education, and political channels. Because of this Verizon FiOS canspend a lot of time on targeting apartment buildings, and major metropolitan areas. Thisstrategy is called targeting the “CREAM” according to Verizon workers. CREAM is essentiallypositioning by product user (Thinking About). Verizon can target specific groups of people whichgives them more liberty to make product specific changes to the consumer’s plan rather thanhaving set packages to serve the local masses. Verizon is able to do this because it beats outcompetitors in a few categories that cable consumers look for when deciding which product tobuy. The key factor is Verizon’s superior picture quality and high amount and diversity ofchannels compared to local cable companies. Verizon also uses a positioning strategy based onattributes and benefits. Comcast Cable is a big player in the cable market, but is repositioning to become moreof a dynamic player. In 2004 Comcast attempted to acquire unique rights to content assets suchas Entertainment television and Disney. Though it was a failed attempt, this illustrates Comcast’sefforts to diversify their content and keep up with the competition (Michael Reynolds). Comcastis making a strong push to try and join the telecommunications market as they realize thatsatellite companies such as Direct TV cannot offer these features. Because of these extrafeatures they gain an edge on a few strong players in the market. In a similar fashion to Verizon,Comcast is trying to gain a competitive edge by changing their features and more narrowly 11
  • 12. target their audiences. DIRECTV is different from these two previous companies as it is a satellite company andcannot manage to offer Internet or telephone services to its consumers. Though DIRECTV isshorthanded in a sense it uses design and cultural symbolism as its positioning strategy.DIRECTV’s main advantage comes from it being tied into the sports, mainly Football. DIRECTVwas the first cable company out of the big three to implement a football package plan(Companies and Markets). When people watch Football on Sundays they always see DIRECTVcommercials and can’t help but make a connection between the two. This gives DIRECTVincreased exposure to potential consumers and helps the company remain in the evoked set ofthose consumers. DIRECTV prides itself on whole easy set up and a simple interface and userexperience. Though there are many other local cable companies, these three cover the broadcategories: local cable, fiber optic, and satellite. While each company has its own unique tactic,the general strategy is the same; a focus on product features and price points. Verizon FiOScontinues to plays to its strengths and that is one reason why it is growing at an exponentialrate.Sales and Market Share Verizon Communications, Inc. reported that its wireless business presented 997,000additional net customers, excluding acquisitions and adjustments, in Q3 2010 as well as 584,000retail post-paid additional net customers. Total customers were 3.2 million and the companyhad 101.1 million total connections at the end of the quarter (M2). According to the 2009annual company report, Verizon Communications Inc. reported $3,651 million in net income 12
  • 13. (IBIS World). The wireless business reported a 6.0% increase in total revenues from Q3 2009, 7.7% increase in service revenues, 26.3% increase in data revenues and also a 29.9% operating income margin and 47.2% segment EBITDA margin on service revenues (non-GAAP) increase. Regarding Verizons Wireline segment, a total of 226,000 net FiOS Internet and 204,000 net FiOS TV customer additions were made during the quarter. Also, 3.9 million total FiOS Internet customers and 3.3 million total FiOS TV customers were outstanding at the end of Q3 2010. FiOS’ main, large competitors hold major portions of the market. Comcast is responsible for holding the largest market share at 37.4% followed by Liberty Media Corporation with 20.5% of the market share (IBIS World). Comcast’s new service, Xfinity already has sales of $955 million. There’s no question Comcast has the greater head count. With 1.6 million Massachusetts subscribers, Comcast is far out in front of Verizon FiOS, which has 226,000 customers in the state, and is expanding one town at a time as it re-wires communities to run its FiOS system (The Boston Globe). Although Comcast has the most market share, FiOS is not far behind. Thanks to its popularity, more than 3.2 million subscribers now use FiOS. Also ahead of Fios, DirecTV boasts 18 million subscribers and sales of $6.5 billion in sales (Dish-Television). Time Warner, the third big player 16 million customers but offers a higher priced service thus showing sales of $8.4 billion dollars.SWOT Strengths Weakness Strong domestic wireless segment Weak performance of Wireline division Growth in Verizons FiOS subscribers Opportunities Threats 4G wireless network Intense competition 13
  • 14. Strengths Strong domestic wireless segmentThe companys domestic wireless segment reported strong performance in the recent years.Revenues from the segment grew by 15.3%, 12.4 %, and 25.9 in 2007, 2008 and 2009respectively. Continuous strong performance of the domestic wireless segment, representing57.4% of Verizons total revenues in 2009, helps it to retain market position and enhances itsbrand image (10-K). Growth in Verizons FiOS subscribersBy the end of the fiscal year 2009, the company had 3.4 million FiOS Internet and 2.9 millionFiOS TV customers. The company added approximately 943,000 net new FiOS TV subscribersand also improved the penetration rate from 20.8% in 2008 to 24.5% in 2009. Furthermore, thecompany also added 952,000 net new FiOS Internet subscribers during 2009 (Hoover’s).To further differentiate its fiber optic platform, the company is also introducing a steady streamof new features such as photo sharing, Facebook, Twitter and Caller ID on the TV screen. Theyare also working with developers to encourage innovation for the home environment. Stronggrowth in Verizons FiOS television and high-speed Internet subscribers will offset some of itscontinued Wireline losses and improve its financial performance (Alexander Grundner, 2009).Weakness Weak performance of Wireline divisionVerizon Business has declined in the recent years. Wirelines revenues in 2009 declined by 4.4%,compared to 2008, and decreased by 1.1% in 2008, compared to 2007. The decline in revenue isdue to lower demand and usage of the companys basic local exchange and accompanying 14
  • 15. services (10-K).The companys global wholesale revenues in 2009 decreased by $723 million, or 7%, comparedto similar periods in 2008, due to decreased use of traditional voice products and continued ratecompression from competition in the marketplace. Weak performance of the Wireline divisionwill negatively affect the financial performance of the company (Hoover’s).Opportunities 4G wireless networkThe next great wave of wireless innovation begins with the fourth generation (4G) of wirelesstechnology. 4G will integrate wireless broadband, providing enhanced connectivity between awide variety of traditional and non-traditional wireless devices such as cameras, multi-playergames, household appliances and health monitoring devices. The company will begin deployingthe nation’s first 4G network based on long-term evolution (LTE). Verizon plans to launch its 4Gnetwork in 25 to 30 markets in 2010 and virtually cover the entire nation’s 3G footprint by theend of 2013. Development of 4G wireless broadband network using LTE technology will enhancethe services offered by the company and generates incremental revenues (CIO Insight).Threats Intense competitionAs mentioned in previous sections, Verizon faces intense competition in the Wireline andwireless industry through companies and providers such as telephone companies, cablecompanies, wireless service providers, satellite providers, and providers of VoIP services. Itsmain competitors are AT&T, Sprint Nextel and T-Mobile. In addition, in many markets thecompany also competes with regional wireless service providers, such as US Cellular, Metro PCS 15
  • 16. and Leap Wireless (IBIS World).Recommendations 16
  • 17. Creative Strategy For our TV commercial, we decided to take a less informative and more creative and mysterious approach that piques consumer interest and draws attention to our social media campaign. Imagine, a town that is black and white, making everything look and feel very dull. A certain family has very uneasy and dissatisfied children. The children are looking out the window when they see a quick flash of light fall from the sky. The children without the parents’ permission run to see what it is. They discover that it is a glowing ball with color and confused, because of never seeing or experiencing such color, run back home with the ball to show to their parents. As soon as they bring it in the whole family puts it on the common room floor. The light travels to the television, phone, and their family computer. The light proceeds to add color to the whole house including the family. People in the town gather around that one house to see what happened to the certain family’s home. Since our slogan or question is going to be, “The World is Brighter With FiOS“ and “Have You Seen the Light?” we thought this story would fit very well. The logic behind the idea was that Verizon FiOS fiber optic technology gives out light and makes everything more colorful and interesting. Through this storyboard we are making Verizon stand out in quality and experience rather than price. The family also magnetizes the homey image that Verizon gives. Since adults with children are more likely to pay for top-notch cable services (Mediamark), this imagery relate to target consumers mindsets and pathos. The kid’s interest also gives the vibe that this is a very trendy and hip product. Verizon FiOS has a very unique and innovative fiber optic technology that our target consumers value, which is behind the symbolism of the ball giving color to a black and white world. That concept is also a subtle comparison saying that FiOS is the new leader in the industry. We kept a similar theme in our print and outdoor ads. We integrated our slogan from 17
  • 18. the commercial, “The World is Brighter with FiOS” and focused on grabbing viewer attention than pushing product price points. Print ads under our campaign depict a night aerial photo of a city where FiOS is available, the lights and colors symbolize both the clarity of FiOS quality TV as well as being the forefront of technology. At the top is a glowing banner with the slogan and at the bottom is brief information about the service and a link to our website. We wanted to move away from competitive pricing as the basis of our advertising and come to a more creative approach that drives people to the website which provides the bulk of the product specs. The color, symbolism, and simplicity goes away from Verizon’s traditional method of throwing large copy specifying plans and does better at piquing interest without overwhelming the viewer with details. A different version of the ad could be featured for each city without adding too much extra cost, allowing customers to relate better to the ad, and have a better image of Verizon FiOS. The sales promo ad in the form of an email or circular takes a more traditional approach toward cable advertising. The ad is meant to inform customers new and old about the Quadruple Play which ads wireless to the normal TV, phone, and Internet bundle. This idea came from consumers desire to simplify the billing process, and since Verizon has a thriving wireless business, adding it to the bundle could be a source of competitive advantage. The ad features a suburban house with a smiling family and all elements of the quad play. The Verizon 3g map is clearly visible above the house and the TV, phone and Internet take the place of the garage doors. The copy, integrated into the sky above and road below, emphasizes the elements of the plan, a base price, and plays up the fact that all this is available on one bill.Reasoning 18
  • 19. The largest portion of our budget will be dedicated to television advertising. We will beplacing commercial ads on the following networks: ABC, CBS, Fox, NBC as well as cable channelssuch as ESPN, CNN, Food Network, and HGTV. These stations are ideal for FiOS advertisingbecause they target viewers that are most interested in and likely to purchase Verizon FiOStelevision services. We plan to place our advertisements during primetime in order to attract themost attention from our target markets. The following programs and their correspondingnetworks are the most effective placements for FiOS in our opinion:  ABC • Extreme Makeover, Desperate Housewives, Dancing with the Stars, Modern Family, Grey’s Anatomy, College Football  CBS • 60 minutes, Two and a Half Men, Big Bang Theory, CSI  Fox • Family Guy, House, Glee, Bones, Fringe  NBC • Sunday Night Football, Chuck, The Event, Biggest Loser, The Office Television commercials will be run intermittently on the aforementioned programs.According to Mediamark, these television networks have proven to attract people involved inbuying televisions as well as those who favor sports packages that FiOS offers. Along with television ads our campaign will print ads in a selection of magazines. We willbe placing print advertisements in the following magazines: ESPN, Family Circle, SportsIllustrated, Business Week, Men’s Health, Fortune, GQ, and Better Homes and Gardens. Theseselections allow us to gain exposure to men, women, and families as well as under-represented 19
  • 20. Asian markets that frequently read business magazines. (Mediamark). In addition to television and print media, we will also be placing advertisements onbillboards in ten of the largest cities where FiOS is available to consumers. We made these adsavailable mainly in the northeast, in the ten largest FiOS wired cities (Fiber for All). Cities such asBaltimore, New York, and D.C contain a large portion of our target markets as well as the highestclusters of current customers. According to Gaebler Ventures, billboards are a relativelyinexpensive way to get a message across to the general public compared to other forms ofadvertising. In addition to billboard advertisements, we will also reach men aged 18-34 byplacing large banners inside of football and basketball stadiums for visitors and viewers to see. Lastly, we will be appropriating a share of our budget to radio advertising, which hasproven to be inexpensive and effective. Strategic Media, Inc. suggests that the advantage ofradio advertising is a unique combination of high reach, high targetability, and low cost. We willbe placing radio advertisements on ten radio stations attractive to our target market of menaged 18-34. Research shows that 63% of radio listeners are male adults between the ages of25-34, which account for almost 28% of the total audience (Strategic Media). These radioadvertisements will consist of 30-second broadcasts during the rush hours of the day whenpeople are most likely to listen to the radio.Sales Promotion In an attempt to reach new customers, we will be setting up a stand inside VerizonWireless stores where potential customers can try out the FiOS service. This will be an effectivemethod of gaining new customers because although Verizon customers may be solely wirelesscustomers, they may not use FiOS for their cable and Internet services. Consumers tend to enjoythe convenience of having a simple bill. To appeal to this trend, we considered adding wirelessservices to the triple play as a source of competitive advantage. This promotional effort will be 20
  • 21. accompanied by inserts in the Sunday papers. According to Shultz, this method of couponingoften works quite well, since it encourages consumers to make a purchase when they areactively considering the merits of the service.Direct Mail In an effort to retain current customers FiOS will dedicate a portion of its budget todirect mail advertising. FiOS will use its database of customers and prospects to solicit emailadvertisements to current FiOS customers. These advertisements will discuss FiOS news andupcoming promotions with customers in an attempt to keep people loyal and interested in FiOS. Additionally, FiOS will also spend a portion of our budget to include advertisements infantasy football e-mail newsletters through FantasyPlayers.com. These newsletteradvertisements will be effective in reaching our intended audience because of the extensivereach of the FantasyPlayers.com network. FantasyPlayers.com offers e-mail advertising in theirweekly newsletter that has over 60,000 opt-in subscribers (FantasyPlayers). Research shows that93% of people who play fantasy football are men. Furthermore, the age group for fantasyfootball ranges from 12-48, with ages 25-34 being the strongest demographic (The FantasyFootball Times).Internet Since Google has acquired YouTube in 2006, advertisements on YouTube have proven tobe a successful method of grabbing viewers’ attention. Currently the world’s largest online videocommunity, YouTube presents advertisements to over 300 million users worldwide, 55% ofwhich are men and 37% are people aged 18-34 (YouTube). In addition to YouTube advertising, FiOS will also be implementing a social mediacampaign on Facebook and Twitter. These social media campaigns will focus on presenting the 21
  • 22. transparency between customers and the company. We believe that these campaigns willfacilitate in addressing customers’ opinions and needs on their current FiOS service.Additionally, the social media campaigns will allow prospective customers to realize the valueand benefits of FiOS from current customers’ perspectives. By using social networks, it ispossible to gain valuable exposure to people whom FiOS on a more personal level. (SearchEngine Land).Public Relations As for public relations, FiOS will be establishing a partnership with ABC’s ExtremeMakeover. Episodes will feature FiOS services that are included in home makeovers. KraftMaidCabinetry has secured a partnership with Extreme Makeover that has proved to be extremelysuccessful. KraftMaid comments on the relationship by stating that they “remain humbled bythe outpouring of love and community involvement that goes into each and every episode.Across the United States, we are honored to have this unique ability to take such an active rolein projects that don’t just change homes—they change lives.” We believe that FiOS will benefitin a similar manner from such a partnership, taking an interest in helping the community as wellas strengthening the Verizon brand image.Personal Selling Personal selling efforts will consist of college campus representatives hired to sell anddemonstrate Verizon’s FiOS service. Verizon will employ three college students at ten differentuniversities to promote and sell FiOS cable service. These thirty campus representatives willwork part-time thirty-six weeks out of the year. Salesmen are beneficial to our organizationbecause they explain to customers how well the service they are selling can satisfy thecustomer’s needs. Salesmen give customers an opportunity to make more enquiries about ourservice, which helps to match the customer’s needs and the service (Personal Selling). 22
  • 23. Media Recommendations Using the percent of sales method for budgeting, we have about $412,500,000 to spend on this campaign. We compared this number to those of our competitors and based on our position in the industry, the number seemed about right. In 2010, the leader, Comcast has been spending about $653 million. Other competitors, DirecTV and Time Warner spend $428 million and $1.8 billion respectively. Time Warner’s expense is spread over all of the company’s brands, which explains the high amount (AdAge). Below is a comprehensive explanation of how our budget will be allocated. • Advertising There will be a commercial with the new slogan “I have seen the light” on prime time of different network and cable TVs. The commercial will run from Monday to Thursday and Sunday for 28 weeks, which include the Super-Bowl season and holiday seasons. The total cost is $128,570,476, with $34,232,660 spent on ABC, $18,134,872 on CBS, $28,345,800 on Fox, $27,857,144 on NBC, and $20,000,000 on cable TV. As for print advertising, the choices of magazines are spread between different target markets. All the advertising will be full page and color with one-year circulation. To target families, there will be $5,832,000 spent on Better Homes and Garden and $3,177,600 on Family Circle. To target young males, $2,261,460 will be spent on Men Health, $1,849,976 on GQ, $2,336,256 on ESPN and $4,233,600 on Sports Illustrated. To target Asian Americans who generally read more business magazines, one-year full-page ads will run in Business Week and Fortune totaling $6,011,200 and 1,494,000 respectively. The total cost of print media advertising will be $27,146,392. 23
  • 24. Radio ads will be broadcasted every weekday, once every hour of the three rush hours in the morning and three in the evening, trying to take advantage of the captive audience. This costs $165 per 30-second slot in the D.C. area, for a total of $990 per day per station. There are five stations in the D.C./Baltimore metropolitan area and we want ads to run in ten major cities including New York, Boston and Los Angeles. Excluding weekends, there are 260 weekdays a year, thus the radio programs will cost a total of $12,870,000. Verizon already has a large advertising presence in sporting arenas and we want to keep that up. Placing ads for FiOS in NBA and NFL stadiums in 10 major cities will cost $25,000,000. Asian Americans are one of the major target market segments for our campaign. Outdoor advertising will be used to target this group. Compared to billboards that are only used along highways, large posters using Asian-American figures, posted at center of major cities will be more cost-efficient. These ten cities are Los Angeles, New York, San Francisco, Honolulu, Chicago, Sacramento, Washington D.C., Seattle, San Diego, and Boston (MPA). The average cost for one city is $5.2 million a year, which makes the total cost for ten cities $52 million (ClearChannel).• Sales Promotion We decided to stop sending out mail promotions and focus on inserts in the Sunday Paper. These circulars will be distributed around the country to build brand awareness as well as inform potential customers about price points and promotions currently in play. These circulars will cost $14,875,000.• Direct Mail 24
  • 25. E-mails will be sent out to existing customers with FiOS news and promotions. The email stream focuses on retention and the design and up keep will cost $100,000. Ads for FiOS will also appear in Fantasy Football News Letters every week, which only costs $2,800.• Internet The banner ads on network TV sites such as Fox.com, ABC.go.com and CBS.com will cost $13,440,000 in total for 365 days. Because the cost is per thousand images, the total times the ad appears will depend on the general traffic of the website. According to Statbrian.com, a website similar to Google Analytics, Fox.com has approximately 3,029,614 visits per day. Rounding this number to 3,000,000 as an average for these TV websites and multiplied by the CPM results in a total of $13,440,000 dollars for the year. Also the viral campaign “I’ve Seen the Light” will be created on several social media sites including Facebook, Twitter, and YouTube. People will be asked about their worst and best experience with cable, and how long can they live without cable. They can also upload homemade video clips on YouTube, which will be shared and connected to the Facebook Verizon page. The production costs and upkeep are estimated to be $500,000 dollars.• Public Relation "Extreme Makeover" is a show where they redo some ones house that deserves to have a better home, and a lot of companies donate products or services to the house and have it show up on TV. Verizon FiOS can foster a partnership with the show and offer a free FiOS package to the families on the show. This is a charity-based activity and can help the company in public relation. The partnership is anticipated to cost around $4,000,000 include the shows production and labor involved in building the house as well as the cost of FiOS 25
  • 26. services. • Personal Selling Personal selling can be done through students as campus representatives, which Verizon has currently started. The representatives will get hourly wage around $15 dollars an hour depends on the district, and contract-based commission every time they find a new customer. For ten cities over 36 weeks, this is expected to cost $162,000 for a year.Rejected Alternatives With as immense a budget as we were given on this IMC campaign, we were hard pressed to reject any ideas we came up with early on. In the end, we as a group decided it would be better to make our campaign count than waste money placing ads in places that might not be effective. The first idea we threw out was direct mail in the form of actual pieces of mail. Research showed that our target audience prefers to get promotions through email and through this medium we could make the experience more enjoyable and interactive. Verizon mailers are generally filled with intense amounts of information and copy in various sizes. While the ads are stylish, they can be overwhelming. By using an email, we can simplify the face of the message and through links, direct consumers wherever we want them to go. We considered similar data when we sat down to brainstorm ideas for our commercial. 26
  • 27. We originally came up with a commercial that was fairly consistent in nature to current Verizonads, employing a bit of humor and emphasizing features and price points. We knew a few thingshowever: first that our customers valued new technology, they generally had high incomes(meaning they can afford the product), and they tended to be younger. We had also allocatedsome of our budget to a social media campaign that we wanted to attract attention to. With allthat in mind, we switched our idea to a more mysterious one, featured in a nice part of the cityand using symbolism to convey advanced technology. The ad didn’t say much about theproduct, though it did show elements (TV, phone, and internet) and rather than forcinginformation into the minds of consumers we attempted to pique interest and drive traffic to thewebsite for the social media campaign. 27
  • 28. Exhibits 28
  • 29. Print Ad New York 29
  • 30. Print Ads Boston 30
  • 31. Sales Promotion: Sunday Circular 31
  • 32. Current Verizon Mailers 32
  • 33. Comcast Mailers 33
  • 34. Direct TV Ads 34
  • 35. Tables and Consumer DataMarket Size and GrowthLeading Companies (# of Subscribers) 35
  • 36. Advertising Expenditures of Leading CompaniesHousehold Penetration 36
  • 37. Viewing HabitsReasons to Change Service by Age and Income 37
  • 38. Total IMC ExpendituresBucket Section Total for YearTotal Budget $412,500,000Production Cost $350,000Advertising Network TV $108,570,476 Cable $20,000,000 Print $27,146,392 Sports $25,000,000 Radio $12,870,000 Outdoor (Billboards) $52,000,000 Extreme Makeover Product Placement In PR Total $245,586,868Sales Promotion Sunday Circulars $14,875,000 Email Streams In DM Total $14,875,000Direct Mail Email Streams (Retention Focused) Design/upkeep $100,000 Ads in Fantasy Football News Letter $2,800 Total $102,800Digital Banners on Network TV sites (e.g. Fox.com) $13,440,000 Social Media/Viral Campaign $500,000 Total $13,940,000Public Relations Extreme Makeover Partnership $4,000,000 Total $4,000,000Personal Selling Campus Representatives $162,000 Total $162,000Total All Buckets $279,016,668 38
  • 39. Television Breakdown Mon-Thurs and Sun, 1 ad per show, over 28 weeksABC 1ad x 28wks x $1,222,595 $34,232,660 Extreme Makeover Desperate Housewives Dancing with the Stars Modern Family Greys Anatomy College FootballCBS 1ad x 28wks x $657,674 $18,134,872 60 Minutes Two and a Half Men Big Bang Theory CSIFox 1ad x 28wks x $1,012,350 $28,345,800 Family Guy House Glee Bones FringeNBC 1ad x 28wks x $99,898 $27,857,144 Sunday Night Football Chuck The Event Biggest Loser The OfficeCable 1 ad/show, 28wks each $20,000,000 ESPN Sports Center NFL NBA CNN Situation Room AC 360 HGTV Food NetworkTotal 128,570,476 39
  • 40. Print Media Breakdown 1 Ad per Issue, Full Page Color for 1 yearPublication CostESPN ($194,688 x 12) $2,336,256Family Circle ($264,800 x 12) $3,177,600Sports Illustrated ($352,800 x 12) $4,233,600Business Week ($115,600 x 52) $6,011,200Mens Health ($188,455 x 12) $2,261,460Fortune ($124,500 x 12) $1,494,000GQ ($154,165 x 12) $1,849,976Better Homes and Garden ($486,000 x 12) $5,832,000Total $27,196,092 40
  • 41. Business Articles:Verizon: Take That, CableIt seeks to reclaim lost ground with a gutsy plunge into pay-TVservicesReality TV doesnt get any more painful than this. The cable-television companies have smackedaround their telecom rivals in broadband over the past few years, grabbing most of the fast-growing market. Even worse, the cable players have started to swipe customers in the traditionalvoice market in recent months. "Cable companies have emerged as telecoms fastest-growingthreat," says Brian Adamik, chief executive officer of researcher the Yankee Group (RTRSY ).Now, Verizon Communications Inc. (VZ ) is striking back. BusinessWeekhas learned that thenations largest telecom provider is preparing to seek cable-TV franchises in parts of Texas andeight other states so that it can offer video in head-to-head competition with cable companies.The service would provide a powerful new source of competition in the pay-TV market, wheremost consumers have a choice of one local cable-TV company and two satellite operators.Although Verizon wont comment on specific TV plans, it has confirmed that its building a systemcapable of carrying the service this year. The company will deliver signals over fiber-optic linesthat its connecting directly to homes and offices. It plans to offer digital TV, videoconferencing,and movies-on-demand either this year or next. Says Paul A. Lacouture, who oversees Verizonsnetwork and is in charge of the project: "The battle is going to get a lot more intense."$1 BILLION ROLLOUTMore intense and more expensive. Verizon expects to spend about $1 billion on the first phase ofits rollout, making fiber lines available to 1 million homes by this fall. The Texas markets willinclude Keller, a suburb of Dallas. Although the identities of the other eight states could not belearned, one is likely to be California, a person familiar with the strategy says. Verizon plans tooffer the service to 1 million more homes next year and a total of 12 million by 2008. Over thenext 15 years, Verizon expects to spend $20 billion to $30 billion to extend service to nearly all 35million customers.Television is only part of the strategy. The new fiber-optic lines also will allow Verizon to offer themost advanced consumer broadband service the U.S. has ever seen. Internet connections of upto 30 megabits per second, more than 10 times faster than a state-of-the-art cable modem ordigital subscriber line (DSL), will be possible, Verizon executives say. Five- and 15-megabitversions will be available for customers who dont require all that juice. Although specific pricinghasnt been decided, the 5-meg version will be competitive with cable modem service, whichtypically costs $40 to $45 a month. Eventually, if theres demand for it, Verizon intends to offerconsumers Net connections of 100 megs or more.Cable rivals in Texas insist theyre not quaking in their cowboy boots. For one thing, Verizon hastried this before. Its corporate predecessor, Bell Atlantic Corp., unveiled grand plans to offer payTV to its customers on the East Coast during the 1990s, but the project failed because of highcosts and technological problems. Even if Verizon can make the economics work this time, it hasno experience in entertainment, where it will have to face off against Time Warner Inc. (TWX ),Comcast Corp. (CMCSK ), and other powerful rivals. "We are already in a highly competitivemarketplace. We face satellite in every market we are in," says David Mack, a spokesman forCharter Communications Inc. (CHTR ), which provides cable service in Keller. "We believe wewill do just fine because we offer superior choice, price, and quality of customer care."RAW FEARVerizons TV sequel may fare better than the original production, however. For one, equipment 41
  • 42. has gotten cheaper and more reliable in the past 10 years, even as the market has grown. Digitalset-top boxes, for example, cost about 50% less than they used to. And new network designshave lowered the expense of construction by more than 50%. A fiber connection now costs$1,100 to $1,700, depending on whether the cable is buried or strung from an easily accessibletelephone pole. That is only 10% more than the cost of installing a regular copper phoneconnection.Just as important is the motivational force of raw fear. Without an effective video strategy, theBells likely will lose 30% of their telephone market to cable companies over 10 years, estimatesanalyst John C. Hodulik of UBS (UBS ). He believes losses could be limited to 15% if telecomcompanies can provide video -- because consumers are more likely to remain with a carrier whenthey purchase a bundle of services.Verizons peers are more cautious. BellSouth Corp. (BLS ) is testing fiber technology, and SBCCommunications Inc. (SBC ) is planning to offer video service over fiber optics in some newhousing developments this year. But no mass deployments are planned. "Im not sure its going tomake sense to take fiber all the way to the home in existing neighborhoods," says Jeffrey G.Weber, vice president of corporate planning at SBC. So far, Verizon is on its own in its aggressiveresponse to the cable threat. But if this gamble succeeds, it could prove to be the catalyst for anew generation of communications in the U.S. 42
  • 43. Technology - Cable TV Viewers in the US - Business Environment ReportApr 19 2010This report analyzes trends in television (TV) cable viewing, measured by the total number ofcable subscriptions at the end of each year. It does not include satellite or telco based televisionsubscription services. Cable television provides television viewing to consumers via optical fibersor coaxial cables as opposed to the over-the-air method used in traditional televisionbroadcasting (via radio waves) in which a television antenna is required. Cable TV is a popularform of television delivery in the US, although it requires a subscription. The data for this report isgathered from the National Cable and Telecommunications Association (NCTA).Latest DataAccording to the NCTA, the total number of cable subscriptions was 63.1 million in June 2009.IBISWorld expects the number to fall to 62.9 million by the end of the year. This will represent adecline of 1.3% compared to 63.7 million at the end of 2008. Anemic growth in disposable incomeand concerns of rising unemployment are causing consumers to be careful with discretionarypurchases and cable TV may be seen as an unnecessary luxury.Growth in the number of US households has also slowed, decreasing demand for newsubscriptions. Growth in US households has slowed due to a drop in construction following thesubprime mortgage crisis and subsequent oversupply of housing. Furthermore, young people areopting to live at home longer with their parents. Initially, before the recession, high housing pricesmade it hard for young people to enter the housing market. While house prices have now fallen,unemployment is rising and credit conditions are tighter making it harder to borrow money.Census Bureau data shows that in 2007 there were 3.6 million parents living with their adultchildren in 2007, an increase of 55% compared to 2000.Five Year TrendOver the five years to 2009, the total number of cable TV subscriptions decreased at anannualized rate of 0.8%. The number of cable TV subscription remained stable over 2005 and2006 as growth in disposable income offset a loss of market share to satellite TV and peopleincreasingly using the computers and internet as substitutes for television. This stability in cableTV subscribers followed three years of declines following the 2001 recession. Also, cable TVpenetration is believed to have reached a ceiling. The internet has been a good substitute fornews and general information for many years. Over the past five years, video media, has becomemore accessible and helped the internet to become more of a substitute for television. The abilityto download movies and television shows from the internet (legally or illegally) has resulted infurther losses of subscribers.As economic conditions worsened starting at the end of 2007 and unemployment began to creepup, disposable income growth slowed. Coupled with rising internet penetration and the cheapersubstitutes on offer online, the number of cable TV subscribers declined in 2007 and continued tofall over subsequent years.Data Volatility AnalysisThe data for the number of cable TV subscriptions exhibits a low level of volatility. The householdpenetration rate of cable TV has reached saturation point, following strong growth in the early90s, and double digit growth in the late 70s and early 80s. Growth in the number of cable TVsubscriptions is linked to levels of disposable income. Higher disposable income leaves moremoney for discretionary purchases such as cable TV. The number of cable TV subscriptions isalso related to the market share of satellite and telco based TV services. Finally, the number ofUS households also has an impact on cable TV subscriptions, affecting the number of potentialnew subscriptions.Historical AnalysisCable television was first introduced into the US in 1948 and began signing up subscribers in1949. By 1975, 9.8 million households had the luxury of watching cable, and that number is eighttimes higher in the late 2000s.The key feature that distinguishes cable programming from broadcast television is the additionalbandwidth of cable television which allows channels to cater more specifically to particulardemographics and interests. In addition, cable is less reliant on revenue from commercials whichallows them to not be tied to ratings. Cable television is also able to more freely feature themeswhich broadcast television would deem unacceptable. 43
  • 44. Since the inception of cable television, broadcast networks have seen the cable industry as athreat. In the 1960s, the Federal Communications Commission responded to network concernsto restrict the importation of distant broadcast signals by cable companies. Throughout the 1970showever, restrictions on the industry were slowly lifted, and cable developed as a legitimatealternative to broadcast networks. Despite this, only 20% of households had access to cable in1980.Additional legislation enacted in the last 20 years gave the cable industry additional freedom.Between 1984 and 1992, more than $15 billion was spent on cable infrastructure, and the numberof cable networks tripled in this time. This trend continued in the 1990s, though prices remainedhigh for consumers.The gradual introduction of digital services has led to a spike in cable subscription numbers in thelast few years, with $84 billion invested into digital infrastructure between 1996 and 2003. As aresult, digital subscriber households have increased from 1.5 million in 1998 to over 21.5 millionin 2003, and the main competition to cable has now become satellite television rather thanbroadcast networks.The number of subscriptions fell over from 2002 and 2004 as the US economy was recoveringfrom a 2001 recession. Unemployment was high, income growth was low and relative affordabilitymeant that people had to cut back on discretionary items.OutlookIBISWorld predicts that in 2010, the total number of subscriptions will fall by 0.4% to 62.6 million.Economic growth is expected to recover but remain slow in 2010. Continuing high unemploymentwill lead consumers to cut back on discretionary spending, while growing Internet penetration willoffer cheap substitutes for many of cable TVs services.Economic growth is expected to slow in 2011 as government stimulus projects come to an endand growth in consumer spending remains low. High levels of private debt accumulated prior tothe recession will need to be repaid to manageable levels and this will slow growth in consumerspending. Low levels of consumer spending will cause cable TV subscription numbers to dropslightly.As the recession and consumer spending increase, a small rise in cable TV subscription isexpected due to pent up demand. However, over subsequent years, the number of cable TVsubscriptions is forecast to trend downwards as satellite and telco based TV services increasetheir market share. Most importantly however, increasing Internet penetration and faster Internetspeeds will bring affordable streaming media capabilities to more households. As Internetservices offering television shows and movies grow and become more popular, cable TV, andpay TV in general is expected to suffer. Additionally, higher taxes are expected when economicgrowth returns to healthier levels. The government will need to pay back the massive public debtaccumulated through bailouts and stimulus packages and will be forced to raise taxes.Time Warner Cable, VerizonPush to End TV BlackoutThreatsJuly 14 (Bloomberg) -- Time Warner Cable Inc. and Verizon Communications Inc., competitors forpay-television services, joined forces today in a group urging federal regulators to change therules allowing broadcasters to cut their signals during contract disputes.The new American Television Alliance was created as New York-based Time Warner Cable 44
  • 45. attempts to reach a new agreement with Walt Disney Co., which owns the ABC televisionnetwork. Other members include Dallas-based AT&T Inc., the largest U.S. telephone company,DirecTV, the largest U.S. satellite-TV provider, as well as cable networks and public interestgroups.“We’re not saying programmers shouldn’t get fair compensation for their content, it’s just the waythe rules are written today hold the consumer hostage,” said Alex Dudley, a spokesman for TimeWarner Cable. “If a diverse group of competitors can come together to form a coalition like this, itmeans that something is clearly broken.”Absent from the coalition is Comcast Corp., the largest U.S. cable-TV company. ThePhiladelphia-based company is seeking government approval for its proposed takeover ofGeneral Electric Co.’s NBC Universal.Dennis Wharton, a spokesman for the National Association of Broadcasters, the Washington-based trade group, said broadcast- network programs are popular with viewers, and disputes withpay-television services are rare.“Pay TV providers built their businesses on the backs of local broadcast signals, andbroadcasters deserve fair compensation for the most-watched TV programming,” Wharton said.FCC RequestSeveral members of the pay-TV group, including Time Warner Cable, Cablevision SystemsCorp., El Segundo, California-based DirecTV, and New York-based Verizon, whose Fios systemcompetes with cable and satellite companies, had asked the Federal CommunicationsCommission in March to consider requiring broadcasters to maintain their signals during disputesand to require arbitration when the two sides can’t agree on the fees for what is known asretransmission consent.“Many of the broadcasters are demanding excessive increases in fees,” said Tom Cullen,executive vice president of Dish Network Corp., an Englewood, Colorado-based satellite-TVprovider and another member of the group. “We just have to fight this battle to keep consumerprices reasonable.”The alliance, which is launching a website and advertising campaign, also plans to ask membersof Congress to urge the FCC to examine the need to change the rules.‘War’ of AttritionThe broadcasters’ association, whose members include Disney and the Fox network, has urgedthe FCC to reject the petition. Such proposals would give pay-TV providers “a financial incentiveto eschew meaningful negotiations and engage in a war of economic attrition with local stations,”the broadcasters’ group said June 4.Bethpage, New York-based Cablevision faces negotiations later this year with New York-basedNews Corp., which owns Fox. Burbank, California-based Disney pulled ABC programming from 45
  • 46. Cablevision on March 7, blacking out the first 13 minutes of the Oscars telecast for more than 3million customers in New York, Connecticut and New Jersey, until the two companies reached apreliminary agreement.Zenia Mucha, a Disney spokeswoman, and David Fish, a spokesman for Verizon, didn’t returncalls seeking comment.Broadcasters have said they should be compensated for supplying their programs, which are themost watched on television. In the past, the networks traded those rights to gain distribution fornew cable channels, such as Disney’s ESPN2, or higher fees for existing cable networks. Pay-TVcompanies have balked at paying for broadcast programs because viewers can watch thoseshows free on over-the-air networks.--Editors: Bob Drummond, Mark Silva.Comcast, Verizon battle it out for marketshareJust listening to the advertising - and there’s plenty of advertising - at any given moment, anunwary consumer of cable services might get the idea that eitherComcast Corp. or VerizonCommunications Inc. has the best deals, the most amazing TV pictures, and Internet speeds todazzle the cyber gods. But in the end, what’s the real difference in what each company offers?Comcast has 1.6 million Mass. subscribersVerizon FiOS has 226,000 customers in the stateThe question is academic in Boston. The ferocious competition makes it seem as if the twocompanies are slugging it out in the streets - and can overwhelm earthbound rivals with less localpresence, like RCN Corp., or satellite services, like DirecTV Inc. and Dish Network - but Verizonhas yet to bring its FiOS cable TV and Internet service to the city, a Comcast stronghold.But it’s not clear what Boston residents are missing, and it’s difficult to make a definitivejudgment about which company offers better quality, service, or price. Cable services are thinlysliced into component offerings - a melange of cable movie channels here, a dash of staggeredInternet speeds there - and offered in packages different enough to prevent apples-to-applescomparisons.But based on interviews with customers, industry analysts, and the cable carriers themselves,Verizon has an edge in some places where Comcast customers are still on legacy systems - oldercable networks set up by companies it has acquired over the years. But that difference is rapidlydisappearing as Comcast upgrades its Bay State offerings.There’s no question Comcast has the greater head count. With 1.6 million Massachusettssubscribers, Comcast is far out in front of Verizon FiOS, which has 226,000 customers in thestate, and is expanding one town at a time as it re-wires communities to run its FiOS system.Verizon touts the picture quality and Internet speed made possible by its FiOS, which it’s buildingat a cost of $23 billion nationwide. FiOS, which reaches more than 100 Massachusettscommunities, runs on a network of fiber-optic cable to the customer’s home, with a short lengthof traditional coaxial cable that runs into the home and attaches to set-top boxes and cablemodems. Fiber-optic cable delivers much more data capacity than the old metal and plasticcoaxial cable. Verizon spokesman Phil Santoro said that FiOS is “giving customers the ultimateTV viewing experience currently available in the marketplace.’’Comcast replies that it’s also got an fiber-optic network, although in the Comcast model, the fiberruns to neighborhood “nodes,’’ and coaxial cable runs from the nodes to customer premises. Inaddition, Comcast is in the middle of major investments to enhance its network to add more high-definition TV channels and faster Internet speeds, and to make significant improvements in 46
  • 47. customer service. The company recently said it will re-brand its cable services under the umbrellaname Xfinity.Continued...Verizon FiOS: A New Dog Learns OldTricksPosted by: Stephen Wildstrom on June 01, 2009V erizon communications hasn’t been at the business of delivering television to subscribers’homes for very long, but it has already developed some of the worst habits of the incumbentcable companies. I’ve generally been happy with my Verizon FiOS service since switching fromComcast some months ago. In particular the quality of the high-definition TV signal that Verizondelivers is significantly better than Comcasts’.This week, however, I got a sense of the extent to which Verizon has turned into a cablecompany. I finally got around to replacing an ancient analog TV in the kitchen with an inexpensiveHD set. My one requirement for the TV wat that it have an HDMI input, which allows a singlecable to deliver audio and video from the set top box. But when I went to hook up the new set tothe Motorola box from Verizon, I discovered that it was a standard-definition box with neitherHDMI nor component outputs.My wife took up the chore of finding out how to exchange the box for an HD box. She immediatelyencountered a run-around worthy of any cable company: customer service reps who could nothandle a simple request (including the location of the nearest Verizon outlet that could handle theexchange), calls the dropped while being transferred, the works. Then there was the bad news:The HD box would cost $10 a month, up from $6 for the standard definition one (I figure thatVerizon will recover the actual extra cost in the first month.)Former Federal Communications Commission Chairman Kevin Martin enjoyed busting cablecompanies chops, but his FCC never made a serious effort to enforce a 1996 congressionalmandate that cable operators facilitate a market for consumer-owned, retail set top boxes. Itslong past time for the new FCC to end the tyranny of the cable company-owned box, and extendthe requirement to Verizon and AT&T, which are now cable operators in all but name. 47
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