Record profitability in its wireless unit drove Verizon’s second quarter.
The company’s FiOS service generated revenue growth, but not enough to compensate for other declining elements in the wireline unit, where second-quarter operating revenues declined 3.1 percent to $9.9 billion compared with Q2 2011.
ARPU for FiOS customers increased to more than $149 in second-quarter 2012, driving the wireline unit’s overall ARPU over $100 for the first time ever, Verizon reported. With Verizon relying on increases in ARPU for revenue growth, increases in prices are inevitable, according to chief financial officer Fran Shammo.
Verizon added 134,000 net new FiOS Internet connections and 120,000 net new FiOS video connections, for end-of-quarter totals of 5.1 million FiOS Internet and 4.5 million FiOS video connections.
But losses in DSL subscribers almost completely offset the gains in FiOS broadband additions. The company’s net broadband growth was just 2,000 subscribers. Adding DSL and FiOS, Verizon has a total of 8.8 million broadband subscribers.
Having ceased its FiOS build-out at about 17 million homes passed, the game for Verizon is now penetration. Internet service penetration increased to 36.6 percent at the end of second-quarter 2012, compared with 33.9 percent at the end of second-quarter 2011; video penetration was 32.6 percent, compared with 29.9 percent, respectively.
The company said it launched its first major initiative to build additional control plane technology into its network infrastructure in the second quarter, with the aim of supporting cloud-based and mobility-enabled industry solutions, as well as enabling rapid and automated recovery of complex optical mesh networks.
Shammo said the weak showing was in part due to Verizon ending the sale of DSL connections to people who don’t have a landline phone account. The effort is part of an attempt to improve profitability. The wired-connection side of Verizon, which still employs nearly half of its workers, is running just above break-even.
The results come in the context of the deal Verizon Wireless struck to market cable broadband from Comcast and Time Warner Cable in its stores, a move consumer advocates see as a capitulation by Verizon that will leave many areas with just one viable choice for home broadband: cable.
Shammo said putting profits over growth also means raising FiOS prices, resulting in fewer new FiOS subscribers.
– The Associated Press contributed to this report
