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World Markets Analysis
By Julian Watson
From Lexis Nexis
Verizon has announced that it has reached 350,000 DirecTV subscribers. The Baby Bell cites bundling video with telephony and high-speed internet, the convenience of receiving one bill for all services, and the breadth of content and flexible functionality of the satellite TV services as drivers of rapid DirecTV subscriber growth.
According to Verizon, a monthly package of calling, high-speed internet and DirecTV can cost as little as US$74.95. The operator also cites the results of a survey of 500 households that recently signed up to DirecTV via Verizon. According to the survey, four out of five would not return to their former provider of entertainment services (most likely to be a cable TV operator).
Significance: In the past few months, there has been speculation that the Baby Bells were interested in acquiring the leading satellite providers, including DirecTV and its rival, EchoStar. However, these and other satellite operators now appear interested in offering high-speed internet, voice and perhaps mobile services in direct competition to the Baby Bells and cable operators.
The results of Verizon's survey indicate that bundling increases customer loyalty, but we already knew that. However, it does not prove that Verizon will be as successful in churning cable operators to its FiOS ultra high-speed internet and TV service. U.S. cable operators are reporting rapid growth in VoIP subscriptions, which indicates that customers are also dropping their landline relationships with the Baby Bells.