This article was written by Douglas Dixon and Josh Page
In past summers, the merry tune of the ice cream truck would call kids out from their houses for some cool delicious goodness. This summer, the roads have been filled with a different kind of vehicle — Comcast and Verizon installation trucks.
Children no longer wait for cool snacks; this summer’s special goodie is Verizon’s fiber optic service. FiOS, the next upgrade in digital connections to the home, promises faster Internet data rates, and allows Verizon to compete head-on with Comcast in providing the full “triple play” of services — telephone, television, and Internet. Meanwhile, Comcast is fighting back with its own all-digital package of services and a healthy advertising budget.
So what’s the best choice in this battle of the phone/TV/Internet provider heavyweights? Is the choice about technology, or is it more about the packages of services and deals that are being offered as this battle heats up?
Looking at the technology, it’s clear that Verizon’s FiOS service offers a significant jump in download data rates from Verizon’s previous DSL service at up to 3 Mbps (million bits per second) to Verizon FiOS at 10 to 20, and up to 50, and then to 100 Mbps and beyond. That compares to Comcast cable-based service at 6 to 8 to soon 16 Mbps.
For a more visceral understanding of these Mbps data rate numbers, we can do some ballpark calculations for download times for a three-minute song and a one-hour TV show. Of course these numbers can vary widely, both depending on the quality of the audio and video (how aggressively they are compressed), and the actual (not theoretical) bandwidth from the download website through the Internet into your home network.
Downloading a three-minute song (around 3 MB at good quality) is not a big deal these days: it would take around 16 seconds on a DSL line (at 768 Kbps), more like 2 to 4 seconds on today’s Comcast cable (at 6 to 12 Mbps), and 1 to 2 seconds on Verizon FiOS (at 10 to 20 Mbps).
But for longer downloads, such as a collection of songs or a movie, these speed differences can make a huge difference. Downloading a one-hour TV show (around 600 MB at good quality) would take around an hour on DSL, some 6 to 13 minutes on Comcast cable, and more like 4 to 8 minutes on Verizon FiOS. And in the future of 100 Mbps FiOS, the one-hour video would download in under a minute.
But beyond the speed of light metaphors, the battle in New Jersey is focused on the pricing. Not surprisingly, Verizon is undercutting Comcast on its traditional television service, and Comcast is undercutting Verizon on its base phone service. Both are promoting bundled “triple play” services with digital phone, TV, and Internet at around $99 with an annual contract.
Consumers love these new offerings. Comcast reports 25 percent penetration of its high-speed Internet service to households where the service is available, and Verizon reports 19 percent penetration of its FiOS Internet service. Customers like the idea of buying the triple bundle of services, with Verizon reporting that it is purchased by some 70 percent of New Jersey FiOS consumers.
In comparing the services available today, Verizon is pushing the promise of better technology and a generally better slate of services at lower prices. But Comcast offers its digital services throughout its installed network, while Verizon is just in the early phase of its rollout of FiOS service, with New Jersey among the early recipients.
If you’re focused on TV offerings, Verizon is still building its service, now up to over half a million total FiOS TV customers, while Comcast has more than 24 million basic cable subscribers, including 1.4 million in New Jersey. And it’s about to add another 81,000 in the heart of central New Jersey, with the completion of its $483 million acquisition of Patriot Media, which serves Princeton Borough and Township, among other upscale communities. Comcast also boasts a larger library of on demand programming, with 9,300 selections per month — 95 percent of which are free.
However, the offerings are rather confusing, as both companies have a variety of tiers of offerings for each of the three types of services. In addition, it’s surprisingly hard to get a clear and complete list of all the available options. The prices listed here come primarily from the company websites, but were augmented after review by the two companies to try to best summarize the service offerings in the central New Jersey area.
But, as we found in researching this article, the services and plans listed on the websites are not complete, so you’ll need to call a service representative to check for additional services, promotional offers, and precise pricing for your specific location. Also check whether the rates require annual commitments (especially for Verizon), or offer the option to guarantee the price for a year or two (as with Comcast). And watch out for activation fees and early termination fees.
To help explain all this better, we’ll look in more detail at the service options for telephone, television, and Internet service, as well as the bundled plans for triple play services. In addition, we’ll look at some of the details of actually installing these services, and some of the trade-offs in moving to the all-digital future.
As a side note, the Comcast cable service is a shared line within your neighborhood, as opposed to a dedicated connection like a traditional phone line or the Verizon FiOS service. This means Internet data service can slow down if all your neighbors sign up and start massive downloads.
The TV line is shared as well — you actually can use a special TV tuner to search beyond the high channels and find the slots where Comcast delivers the on demand services that your neighbors are watching — at least until Comcast decides to encrypt the signals.
We’ve gone from the AT&T monopoly in telephone service, to unbundled services for local, regional, and long-distance calling, back to consolidated bundled services from both Verizon and Comcast that offer unlimited calling throughout the United States, Puerto Rico, and beyond. As the new entry in the market, Comcast is offering better deals on phone service, with calling plans that are generally less expensive than Verizon, include more countries, and offer more phone features.
As the incumbent telephone provider, Verizon offers a variety of a la carte telephone calling plans for local service, plus add-ons like caller ID, and national and international long distance. Its Freedom unlimited calling plans are available for both traditional analog service and the new FiOS digital service.
The single Comcast Digital Voice unlimited telephone service has several advantages, especially if you are interested in calling features and an extended calling area. The pricing ranges around $39.95 to $44.95, depending on bundling of other Comcast services. The Comcast service includes 12 calling features, plus voice mail. And Comcast extends the included countries beyond Puerto Rico and Canada, adding the US Virgin Islands, Guam, America Samoa, and Saipan/N. Mariana Islands.
If you need an additional phone line, Comcast offers a Twice the Talk plan for $49.95, plus an additional $10 when bundled with other Comcast services. With Verizon, you’ll need to independently sign up for the services you desire on the second line.
For “cable” TV service, both Comcast Digital Cable and Verizon FiOS TV offer a large catalog of television channels, with a selection of specialty channels, music stations, premium packages, and on-demand programming. And, in our area, both offer channels from New York and Philadelphia — though check if your favorite channel is included (for example, in at least some areas, Verizon omits WNET 13/PBS in New York and Comcast omits WPIX 11, also from New York.
Both companies offer a full basic service package with a full slate of 200-some channels, including local stations, cable standards (like CNN, ESPN, Discovery Channel, Nickelodeon, MTV), and 40-some music channels. Both digital services include an interactive program guide and an on-demand service with some free programming to watch when you want as well as pay-per-view for ordering movies and other material.
Beyond the basic cable channels, Comcast and Verizon offer add-on packages with additional channels including movies, sports, and Latin programming. And they offer packages of the branded premium channels, including HBO, Cinemax, Starz!, Showtime, The Movie Channel, and Encore. The premium “channels” are actually multiplexes — mini-networks with multiple channels under the brand (East, West, Family, Comedy, etc.). Subscribers to premium services also can access some popular shows after the air date through the on demand service.
Since Verizon is the challenger in TV service, it offers more aggressive pricing and more premium channels and options. For example, the Verizon FiOS TV Premier service at $47.99 offers the full set of cable channels and on demand programming, compared to $70.70 for Comcast Digital Preferred. Verizon FiOS TV with full premium movie channels adds up to $86.97, compared to Comcast Digital Premier at $114.95. And adding premium channels plus a variety of sports channels tops out at $89.97 for Verizon and $119.90 for Comcast.
HDTV and DVRs
Both Comcast and Verizon offer an upgrade to high-definition TV service for an additional $5 a month, which includes the required HDTV set-top box. Both also offer set-top box upgrades to add the ability to record the digital programming with a Digital Video Recorder (DVR).
Comcast offers a dual-tuner DVR for $12 a month (can record one channel while watching another). Verizon offers a dual-tuner HD/DVR for $13 a month (can record up to two shows at the same time while watching a previous recording).
Then, to access your recorded shows from other TV sets in other rooms, Verizon offers a Multi-Room DVR for $20 that can feed recorded programs to other TVs with the standard set top box ($5 each). Or you can get separate DVRs for each set.
The big news for home Internet service, of course, is Verizon’s introduction of its FiOS (Fiber Optic Service) “state-of-the-art fiber-optic network,” with speeds of up to 50 to 100 Mbps through optical fibers that weigh less, carry information faster, and use less electricity than standard copper wiring. Even in its initial roll-out, the Verizon FiOS broadband service offers faster data rates than Comcast at lower price (also with significantly faster upload speeds), with the option to expand to even higher rates.
From the early days of online computers, plain old dial-up phone service offers nominal data rates of up to 56 Kbps (thousands of bits per second). Today’s broadband Internet services in the United States can run 100 to 1,000 times faster, with download speeds in the multiple Mbps (million bits per second). Upload speeds are typically significantly slower.
Then came DSL (Digital Subscriber Line), which embedded digital data service on existing analog lines. However, DSL service was limited by the distance from your house to the local office — longer distances degraded speeds, and too much distance meant service was not available.
Current Verizon DSL service offers 768 Kbps to 3 Mbps download speeds, with upload rates of 128 to 768 Kbps respectively. For inexpensive broadband, Verizon 768/128 Kbps DSL is only $14.99 a month, albeit with really slow uploads. The top DSL service is 3 Mbps/768 Kbps for $29.99, which now can’t compete with even the basic Verizon FiOS service (5/2 Mbps at a similar price).
To move beyond DSL, Comcast offers 6 and 8 Mbps service in New Jersey for $42.95 and $52.95 respectively, with relatively slow upload rates of 384 and 768 Kbps. Comcast is also beginning to deploy a 16/1 Mbps service at the same $52.95 price.
Comcast also has added a feature called PowerBoost, which doubles the download rates when downloading larger files, including software, games, music and photos — up to 12 and 16 Mbps, respectively, on its 6 and 8 Mbps services. PowerBoost works by exploiting excess capacity in the Comcast backbone to effectively double the download rate, as long as your neighbors are not all busy downloading at the same time. PowerBoost also can significantly improve upload data rates with a boost of up to 2 Mbps.
And now there’s optical fiber. The basic Verizon FiOS service at 10/2 Mbps for $39.99 is faster than Comcast’s highest standard rate, with significantly better upload speeds, and less expensive than even the slower Comcast service. And the next step doubles both download and upload speeds to 20/5 Mbps for $49.99. The next step to 50/5 service is also available for $139.95 to $179.95 (depending on location), and 100 Mbps download rates are on the horizon. (Again, these prices require an annual contract, so watch out for activation and early termination fees.)
Both the Comcast and Verizon services include technical support and tools such as anti-virus software and multiple e-mail addresses. Both include a free modem, and can be turned into a wireless network with the help of a router.
Comcast High-Speed Internet services goes up to around four times faster than DSL, with speed tiers from 4 to 16 Mbps download (doubled with PowerBoost), and corresponding upload rates from 384 to 1 Mbps (to 2 Mbps with PowerBoost).
Getting a Triple Play
You may think of companies like Verizon or Comcast in their old roles as providers of specific services — in this case, plain old telephone or cable television. But in this new age, these companies see their digital pipes into the home as the conduit for additional services — and additional income. Their goal is to increase ARPU (“are-poo”) — the Average Revenue Per User — not only by upgrading existing services (i.e., adding caller ID or premium TV channels), but, even better, by adding entire new services such as broadband Internet.
These companies therefore would really like to hook you for the so-called “triple play” of services — telephone, cable television, and broadband Internet — all from the same provider, and all charged on one “convenient” bill.
To encourage you to sign up (and to switch from the competition), both Verizon and Comcast are offering triple-play bundled packages starting at around $99, with a significant price break for signing up for all three services.
The Comcast Starter Triple Play bundle at $99 includes the lowest tier of each service — not the full set of 200-some non-premium cable channels, and 6 Mbps/384 Kbps Internet service. The Verizon bundle at $95 steps up to the full non-premium TV service, 20 / 5 Mbps Internet service, but has the basic telephone service without calling features (plus, add $5 for a set-top box, and note that the Verizon price requires an annual contract with termination fees).
In addition, when evaluating these offers, note they are promotional rates and work on one or two-year annual cycles. Once the annual term expires, you will be back to paying full price — or you can hope that ongoing competition will continue to encourage bundled pricing.
Separate from its FiOS services, Verizon offers Double Freedom bundles of unlimited calling and 3 Mbps Internet DSL service for $69.99 a month. And it has a triple-play service by adding bundled Direct TV satellite service for $99.99 a month.
In locations with FiOS service, Verizon is offering $94.99 triple-play bundles (vs. $142.97 individually), with digital telephone, FiOS TV Premier with full service but without premium channels, and fast FiOS Internet service with 20 Mbps service (download speed, with 5 Mbps upload. Again, add $5 for a set-top box.
And beyond triples, the industry is looking forward to the home run of bundled services, the “quadruple play,” with the addition of mobile phone service, all in one conveniently consolidated (and even larger) bill. Verizon reports that it will be adding bundled wireless service later this year.
The Digital Home:
The good news as you join the digital future is that your home can go digital without needing to throw away your existing equipment or even wiring. While the new digital signal comes to your home on exotic technology like optical fiber, it is then split and sent around your house on the existing analog-style wiring — plain old telephone wires and plan old coax video cable.
Digital telephone service is split out and connected up to your existing phone wiring, i.e., at the box in your cellar where the existing phone service enters your house.
One key difference with changing to digital phone service is that you lose the benefit that traditional telephone service is self-powered, so it continues to work if there is a power failure in your house (or even neighborhood). There is a small current in the phone wire, enough to ring the phone, make a call, and even light up the dial on the old Princess phone. Digital telephone service, however, is powered from your home electrical service, which is why both Comcast and Verizon include a battery backup unit with the service. Verizon specifies eight hours of talk time for its backup battery (that’s talk time, not clock time after an outage).
Digital television service is split out and transmitted on standard coax cable. If you have an existing Comcast analog cable service, you can switch to digital by simply adding a set-top box at your TV — the digital signal flows on the same cable as the original analog service.
However, while Verizon’s new FiOS service offers Internet and associated services zipping at the speed of light, the actual installation process of the FiOS equipment can be rather pokey, running at the slower speeds required by human technicians running new cabling to your house, and any required wiring around your house. Verizon estimates the FiOS installation process will take between four to six hours, depending on the difficulty of running the required cabling to and around your house.
The first step, however, is to check whether FiOS service is available in your area — if the fiber optic cables have been run through your town, and are enabled for service. Call Verizon, or check online. Installation is free if you sign up for one year of service, or else $69.99 if you select a monthly plan. This includes setting up the service on one computer; Verizon will set up additional computers during the initial installation for $75 each.
On the FiOS installation day, the technician will come to your residence and install an Optical Network Terminal (ONT) box outside or inside your house, to bridge the digital optical cable into the phone, Internet, and/or TV services for your home. The ONT is a white box, a little bigger than the size of a shoe box, which is connected to the Verizon fiber service from the utility pole, and typically installed where existing cable/telephone wires enter the residence. The ONT then connects with wiring to the services in your home, and also to a power outlet.
Along with the ONT, Verizon also installs a battery backup unit inside your home that provides approximately eight hours of voice service (but not TV and Internet) in case of a power outage. This obviously must be installed near a power outlet.
For Comcast digital telephone service, the digital connection is typically split out from the Comcast cable at your television.
For digital television service, both the Comcast Digital and Verizon FiOS TV services are fed through the house using the same standard coax audio/video cable used for traditional analog cable TV. The signal is wired to a set-top box (STB) on each television to tune to the digital channels, display the program guide information, authorize access to the premium channels, and provide interactive video on demand services.
The time required for installing new cable TV service depends on the layout of the house, and where the splitter box needs to be located. You should plan on a few hours, between running wires, installation of the inside/outside equipment, and programming the channels. More time may be needed for running wires to additional televisions or for more complex equipment, such as a set-top box with digital video recorder (DVR) features, or making HDTV connections to your television
For Internet service, Comcast or Verizon will install a wireless network router (near the main TV with Comcast cable service, or near the Verizon FiOS ONT box). This will provide wireless access to notebook computers in and around your house. You also can use wired connections with standard Ethernet cables for desktop systems and for higher performance.
The technician will run data wiring and install wall jacks as required. As part of the installation, Comcast or Verizon will activate the Internet service, configure the provided router, and connect and configure one computer. You also can set up the wireless network to other computers in your home — you may want to ask for help to set up a secure connection that is less easy for neighbors and passer-bys to share and snoop.
In New Jersey, Comcast is now deploying 16 Mbps service, and the Comcast-developed PowerBoost technology provides a nice interim improvement, taking advantage of extra capacity in the service (when available) to double rates for file downloads (www.comcast.com/powerboost). Meanwhile Verizon is adding 50 Mbps to its FiOS service.
The next big step for cable-based Internet service is DOCSIS 3.0 (Data Over Cable Service Interface Specification) defined by the CableLabs consortium (www.cablelabs.com), which promises downstream data rates of 160 Mbps or higher and upstream data rates of 120 Mbps or higher.
Meanwhile, Verizon sees FiOS as the future, a faster and more reliable service, which is why it is investing in running fiber all the way to the home. It already has the headroom to roll out 100 Mbps service in the near future. Then Verizon is beginning test deployments of technology based on the ITU GPON (Gigabit Passive Optical Network) standard, which promises to further quadruple Internet downstream speeds (www.itu.int).
Verizon’s massive cable-laying trucks have been a constant presence throughout central New Jersey as the company places a big bet on mass acceptance of its FiOS service. As its roll-out rolls along, new choices emerge for consumers, who have been captives of just one cable television company per town, some better than others, for a quarter of a century, just as they were previously — but generally more happily — married to just one phone company before the AT&T break-up.
Will inertia win out over innovation? Will cable remain the main conduit for Dancing with the Stars and Monday Night Football? Or will the excitement of FiOS entice thousands to beg to be re-wired for super-speed Internet, and add Verizon television service while they’re at it?
Each company, with a huge investment on the line, is nervous. Nervous enough to blitz mailboxes from Princeton to Trenton with offers of increasingly competitive pricing. It may not yet be time to switch, but it may well be the time to study just what each company is offering.