Verizon (VZ) has finally released its new Internet tier system along with the pricing structure that goes with it. While the services are quite expensive, I think Verizon is being fair in its pricing. It is meeting the needs of more customers, furthermore, and this should have a positive impact on the stock.
Each of the new services are offered on a standalone basis. In addition, each can be combined in a package with Verizon voice and video, creating either double-play packages, or triple-play packages. The company's release states: with the 15/5 Mbps option, double-play bundles will cost between $84.99 and $129.99. The 50/25 option costs between $109.99 and $149.99 per month for the triple-play bundle, and the double-play bundle will be $10 less per month. At the 75/35 level, you can get triple-play bundles for between $114.99 and $154.99 per month if you are a new subscriber. The 150/65 option gets you triple-play bundles for $169.99 to $174.99 per month or double-play bundles with FiOS TV for $154.99 to $159.99 per month. This is also offered as a standalone service that will cost $99.99 per month on a month-to-month basis, or $94.99 per month with a two-year contract. The 300/65 option-the Quantum service-will be $209.99 per month on a month-to-month basis, or $204.99 per month with a two-year contract.
This may seem a little steep, and it will likely raise the data bill of the average customer. The new FiOS Internet service that Verizon will offer is faster though, and this cannot be forgotten when considering the price changes. In short, you will receive a good value for your money if you opt for this service. In addition, it is important to note that the average price increase will only be around $10 or $15. If you make a few adjustments to your TV package, furthermore, you may not have to pay any additional fees at all.
The rise in prices may have a far-reaching impact though. For example, cable companies that rival Verizon may attempt to compete at a financial level by raising their own prices. Many consumers have experienced price freezes or even reductions from cable companies, but these same companies may want to get more money out of the deal by raising their prices. On the other hand, they may keep their prices low in order to draw consumers away from Verizon. The response from these competitors will be important when evaluating how the price change will impact Verizon.
This is an interesting strategy for Verizon to employ. The company hopes to increase its client base by emphasizing speed. This is a fairly safe strategy to follow though, as speed is becoming increasingly important in society today. In fact, this significant increase in speed may be exactly what the company needs to compete with the cable companies in a serious manner.
Verizon is not the only tech stock with a focus on high speed broadband. Alcatel-Lucent (ALU) recently brought high speed broadband to rural Texas, an area of the country where Internet service has been inadequate for a long time. Residents in the area will now have the opportunity to enjoy high speed Internet on a variety of different devices, including mobile devices. Alcatel-Lucent is working with West Central Wireless and is enabling the telecommunications company to launch a 4G LTE service. The company will also open its core network and allow other broadband providers to function in the region. While this is not a huge move for Alcatel-Lucent, I think this will have a positive impact on the stock and will help its price go up.
CenturyLink (CTL) is another competitor that has recently made a splash in the news, as it signed a $233 million deal with the Social Security Administration (SSA). For the next five years, CenturyLink will provide data support to the Social Security Administration, enhancing the quality of service that the SSA can provide. Deals like these will keep CenturyLink ahead of the game. As far as tech stocks go, it is still one of the best ones to back and should continue doing well.
Windstream (WIN) is in the news for good reasons as well. Pratt Industries has chosen it to provide "customized managed Unified Communications services." This is a significant deal for Windstream, as Pratt Industries is one of the largest box manufacturers in the world. The company has 72 locations that span the world, and Windstream will be the company charged with connecting and centralizing communications between each of those 72 locations. It will also be modernizing the systems and providing a more streamlined method for communication. In short, this is a big project that will generate revenue and should also lead to rises in Windstream stock.
Frontier (FTR) and The Berry Company recently announced that the partnership between the two companies will continue for a while to come. The two companies collaborate to bring us FrontierPages, which is essentially an electronic version of the Yellow Pages that makes life a lot easier for everyone. They also provide a wide variety of advertising solutions for small and medium-sized businesses that need to get their names out there. This is a highly profitable revenue source, and Frontier, a Fortune 500 company, is wise to hang on to it at this point in time. This should help it maintain a stable stock price.
Several competitors are doing well, but Verizon is still a good stock to consider. Verizon's new Internet pricing schemes may be the way forward for the company. This is not just in terms of creating profits, but also in terms of creating a society where the Internet is a workable resource. At first, people may look at the prices of the new packages and back away, but in time, this could become a significant source of revenue. I feel that it is simply a matter of time before Verizon stock starts to improve significantly as a direct result of this introduction.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.