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Verizon (NYSE:VZ) says that Time Warner Cable (NYSE:TWC) is lying in its advertising. According to The Wall Street Journal, "Verizon says that Time Warner Cable's ad implies FiOS requires a satellite dish for TV service and that it isn't able to bundle together high-speed Internet, video and phone calls."
The problem, of course, is much deeper than one ad. Verizon has spent $23 billion to put fiber in front of its 18 million customer homes. In the process it hopes it can take TV and high-speed Internet customers away from cable companies and satellite TV firms. If the product does not do well, there will be hell to pay in the Verizon executive suite.
Cable company stocks have fallen over the last three quarters, to a large extent due to the fear that they now have real competition for packages for voice, TV, and broadband, known fondly as the "triple play". Verizon does not have to get a huge number of cable customers to switch to do some real P&L damage. Early indications are that consumers like the fiber service. Because it can deliver more bandwidth it can offer larger numbers of HD channels.
The court fight over the ad makes for nice newspaper copy, but the real fight ends up being one for shareholder value. Time Warner Cable's stock is down 30% in the last year.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
4-12-2008 @ 1:30PM
Bruce L. said...
What I didn't read in this article are the exact download speeds and even more important - the price. Why squabble at all if the end product isn't worth it to begin with? The highest speed I've seen advertised between the two is 10 mbps (15 with an add-on) and the lowest being 3. Price wise, they top out at between $38 and $45 on the high end and the minimum being $29. The bundles, they hover around $75. So with the prices varying slightly and very little difference in speed, what is the actual problem? I don't read any mention of the bundle for Cavalier (C2 - phone and internet) which beats these prices by around $20. Misleading advertising is wrong but when the true figures come out and the end product still doesn't measure up to the competition, what's the point?