Verizon FiOS IMC Paper

David BenBassett
Nicole Spiros
Young Lee
Xiao Xiao Yu
Frank Pirog

Table of Contents

Executive Summary…………………………………………………………………………………………………………………3

Situation Analysis……………………………………………………………………………………………………………………7

Recommendations……………………………………………………………………………………………………………..…16

Rejected Alternatives……………………………………………………………………………………………………………26

Exhibits…………………………………………………………………………………………………………………………………27

Works Cited………………………………………………………………………………………………………………………….48

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Executive Summary

3

Cable TV is a huge part of American entertainment. 99% of the population in the United

States has a television set and a large portion of those households receive cable service. Cable

started in the 1970’s offering about 20 channels. Since then it has evolved, offering hundreds of

channels worldwide.

Verizon FiOS is a large enough company to impact in the cable industry however it is by

no means the leader. There are numerous others like Verizon that provide cable service to

households in the United States; Time Warner, Direct TV, and Cox all have qualities, unique and

similar that are used as selling points.

Cable companies generally target anyone with the capacity to watch and enjoy

television. The differences lie in the plans and special features each company provides. Verizon

for example has new, cutting edge technology, FiOS. FiOS is offered as a bundle that combines

television, phone, and Internet service otherwise known as a triple play.

Verizon targets families and young adults, aged 18-34. Ours is an age group that loves

the latest trends and innovative ways of making communication more effective. The cable

industry as a whole is made of very similar companies, so each must find ways to innovate and

narrow their markets to boost sales.

Verizon FiOS has been on the market now for almost six years. Introduced in 2005, the

service was the first to bring digital cable to homes via fiber optic cables that supply data much

faster than other types of cable. Other providers such as Comcast and DirecTV have been in the

market for a few more years but have continued to remain as big players.

The cable provider industry is growing according to Ibis World. Though the idea of cable

service is mature, Verizon and other providers have moved the industry out of its mature phase

by staying up to date and adopting new technologies. Along with that, the industry stays fresh

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with ever-changing packaged deals involving channel selection, television features, phone

service, and Internet.

Although Comcast has the most market share, FiOS is not far behind. Thanks to its rising

popularity, more than 3.2 million subscribers now use FiOS, representing a near 26%

penetration rate nationwide (Kula). Bill Kula states that, “as the now seventh largest video

provider in the nation, we keep adding new channels, more video on demand and HD content

and interactive features that drive our competitors crazy.”

Other brands aren’t the only one’s innovating. In an effort to stay competitive, Comcast

has created a new service called Xfinity. With this new service came an expansion of the

company’s Fancast service: a huge selection of on-demand videos that can be played from your

TV, computer or mobile device. Over 3,000 hours of that programming is also in HD. Besides

being able to access their site, you can also log into sites for cable networks like TBS and TNT

using the same login credentials (TechnoBuffalo).

In terms of advertising, Verizon's introduce their FiOS TV and promote its Triple Play

bundles when it comes to pricing. FiOS is advertised in a package that includes Internet, TV, and

phone services in one bill. Print ads tend to be simple and generally aim to inform the consumer

about the price of their services and the available options.

Advertisements from competitors are much more dynamic than Verizon’s. Comcast

plays on its least expensive plan to draw in the consumer. They also use clever visuals and

minimal text so that consumers are not overwhelmed. Direct TV plays off of professional sports

to draw people into their HDTV upgrade and sports packages, which are targeted towards the

male demographic. Time Warner follows the same format, making sports the main attraction of

their ads. All the ads have pictures of a sport and below, a description of their packages and

services. Like Verizon, all of these players offer a telephone, Internet, and TV package.

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Growth in advertising has decreased, but the cable industry is thriving, and is projected

to continue growing in the future. As the economy continues to improve, unemployment

decreases and people get more disposable income to spend. The cable industry is highly

competitive consisting of 2,919 enterprises, mostly small and local (IBIS World). The industry is

very sensitive to fluctuations in the economy because most people do not consider cable a

necessity and older consumers consider services a commodity (Mintel). Also, tough economic

times mean reduced advertising expenditures by sponsors, which cable companies rely on for

revenue.

The industry always has to be on the forefront of technology and adapting their services

to include new innovations. The actual growth in new subscribers to basic cable is dropping

because the market has been highly penetrated, but there has been significant growth from

current customers switching to new digital cable and satellite services.

Many companies have existed in this market for a long time, the big three now being

Comcast, Verizon, and Time Warner Cable, etc. Once a consumer chooses a cable company, it is

hard for them to stop the current service or switch to another company, so winning customers

entering the market is a priority. Our goal is to ultimately increase FiOS’ market share and help

gain Verizon a competitive advantage through integrated marketing.

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Situation Analysis

7

Advertising Landscape

The top three competitors for Verizon FiOS are Comcast, Direct TV, and Time Warner. It

is clear that the advertising strategy in the industry involves trying to convey a message about

the attributes and pricing packages of each company’s television service.

Informational messages of the competitors follow a very similar structure for delivering

their message. Their messages explicitly draw firm conclusions; they do not rely on their

receivers to draw their own conclusions because explicit conclusions make it easier for people to

understand and retain the message (Belch).

Because there is high competition in the television service industry they use one-sided

messages so that the receivers are only informed about their positive attributes and benefits

(Belch).

All of the competitors use both verbal and visual messages, but the message is more

strongly represented by the verbal elements of the ads. Ads will verbally describe the pricing

models for the services and what those services provide while Visual messages mainly

supplement the former. For example, DirectTV uses pictures of sports icons like Eli Manning to

appear in their advertisements for sports packages. Eli's presence is only used to supplement

the verbal information about the sports package for DirectTV.

Comcast, DirectTV, and Time Warner mix humor in with their appeals toward the

rational, logical aspect of the consumer's decision-making process. The way a few of them do

this is through comparative advertising. For example, Comcast directly names Verizon in its

advertisements and vice-versa. Comcast will point out negative attributes and about Verizon's

service and then say why they are better. While this message appeal can catch attention, its

effectiveness is questionable. Since comparative advertising has been overused it can affect the

credibility of the company trying to utilize it (Belch).

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Consumer Behavior

Consumers in the cable market behave very differently based on age and income and

generational beliefs about technology greatly effect purchase decisions (Ad Age). According to a

Mintel report, 85% of households in America have some sort of television service, be it FiOS,

Xfinity, DirecTV, etc. An essential difference between groups is the perception of cable as a

commodity. Under age 45, consumers tend to be more interested in the differences between

providers such as speed and picture quality, DVR capabilities, and bundling. Users over 45

however, report that they are less likely to ever make use of those features and thus consider

price the main differentiator. The same follows for consumers of different income levels; higher

income users are more interested in early adoption of new technology and view the service less

as a commodity (Mintel).

It is important to note, that 82% of people within the report stated that they only watch

TV during original or rerun broadcasting, and that makes up about 15.6 of their viewing hours.

This means that at present, the majority of consumers don’t frequently use added features like

DVR (Mintel). With 43% of pay-tv users stating that they watched TV through DVR, the feature is

becoming more and more important which reflects increasingly busy lifestyles. This statistic

skews towards younger consumers and illustrates their value of convenience (Mintel).

A major concern of cable providers is customer switch rates and we have some data

behind the behaviors. With companies constantly vying for market share this data is important

for strategic planning. Consumers under 45 or those with an income upwards of $75k are the

most likely to switch services within the next six months. This is due to these groups’ desire to

be on the forefront of technology (Mintel). FiOS is doing well here since their fiber optic

technology is cutting edge at the moment. However based on the rate technology advances, this

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could change within a year. For most consumers, the main reasons for switching are price and

customer service (Mintel).

On a macro level, the pay-tv market is growing, though slowly due to the stagnated

housing market and emergence of cheap online content (IBIS). The market is currently

generating about $91.1 billion.

Aside from the competition between traditional cable service providers and

telecommunications companies like Verizon, the industry also faces pressure from online video

providers like YouTube and Hulu (IBIS). The Internet has not made a substantial impact on the

industry however because as previously stated the majority of viewers still would rather view

television on TV and most of the providers in the industry bundle Internet in with their television

anyway (Mintel).

Companies maintain revenue growth through the use of promotions. Though

promotional pricing and offering free extra services causes short-term losses, after the first year

service charges increase and losses are recouped (Mintel). Currently, free DVR offered initially is

a popular promotion among companies. Companies also tend to tier their price points to

capture as many consumers as they can, offering more or less features for an appropriate price

(Mintel). Bundling is also used within the industry as an attractor to customers who want to

simplify their billing. According to Mintel, 33% of consumers like the provider for all of their

services.

Positioning

Verizon FiOS plays in a very volatile and competitive market. It is difficult to stand out in

markets where the product differentiation is not always understood to everyday consumers or

when that same product serves masses of consumers. Though there are many obstacles and

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difficulties in this market Verizon uses a very creative approach in it’s positioning in an attempt

to stand out from the competition. Instead of just sticking to one positioning strategy, Verizon

seems to have a combination of strategies that helps beat out its competitors.

Verizon FiOS is different from many cable companies such as Cox and Comcast who try

to focus on the local community feel. Verizon is not a “cable company”, but rather a

telecommunications brand that provides cable. Many cable companies such as Comcast and Cox

have to distribute local news, education, and political channels. Because of this Verizon FiOS can

spend a lot of time on targeting apartment buildings, and major metropolitan areas. This

strategy is called targeting the “CREAM” according to Verizon workers. CREAM is essentially

positioning by product user (Thinking About). Verizon can target specific groups of people which

gives them more liberty to make product specific changes to the consumer’s plan rather than

having set packages to serve the local masses. Verizon is able to do this because it beats out

competitors in a few categories that cable consumers look for when deciding which product to

buy. The key factor is Verizon’s superior picture quality and high amount and diversity of

channels compared to local cable companies. Verizon also uses a positioning strategy based on

attributes and benefits.

Comcast Cable is a big player in the cable market, but is repositioning to become more

of a dynamic player. In 2004 Comcast attempted to acquire unique rights to content assets such

as Entertainment television and Disney. Though it was a failed attempt, this illustrates Comcast’s

efforts to diversify their content and keep up with the competition (Michael Reynolds). Comcast

is making a strong push to try and join the telecommunications market as they realize that

satellite companies such as Direct TV cannot offer these features. Because of these extra

features they gain an edge on a few strong players in the market. In a similar fashion to Verizon,

Comcast is trying to gain a competitive edge by changing their features and more narrowly

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target their audiences.

DIRECTV is different from these two previous companies as it is a satellite company and

cannot manage to offer Internet or telephone services to its consumers. Though DIRECTV is

shorthanded in a sense it uses design and cultural symbolism as its positioning strategy.

DIRECTV’s main advantage comes from it being tied into the sports, mainly Football. DIRECTV

was the first cable company out of the big three to implement a football package plan

(Companies and Markets). When people watch Football on Sundays they always see DIRECTV

commercials and can’t help but make a connection between the two. This gives DIRECTV

increased exposure to potential consumers and helps the company remain in the evoked set of

those consumers. DIRECTV prides itself on whole easy set up and a simple interface and user

experience.

Though there are many other local cable companies, these three cover the broad

categories: local cable, fiber optic, and satellite. While each company has its own unique tactic,

the general strategy is the same; a focus on product features and price points. Verizon FiOS

continues to plays to its strengths and that is one reason why it is growing at an exponential

rate.

Sales and Market Share

Verizon Communications, Inc. reported that its wireless business presented 997,000

additional net customers, excluding acquisitions and adjustments, in Q3 2010 as well as 584,000

retail post-paid additional net customers. Total customers were 3.2 million and the company

had 101.1 million total connections at the end of the quarter (M2). According to the 2009

annual company report, Verizon Communications Inc. reported $3,651 million in net income

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(IBIS World).

The wireless business reported a 6.0% increase in total revenues from Q3 2009, 7.7%

increase in service revenues, 26.3% increase in data revenues and also a 29.9% operating

income margin and 47.2% segment EBITDA margin on service revenues (non-GAAP) increase.

Regarding Verizon's Wireline segment, a total of 226,000 net FiOS Internet and 204,000 net FiOS

TV customer additions were made during the quarter. Also, 3.9 million total FiOS Internet

customers and 3.3 million total FiOS TV customers were outstanding at the end of Q3 2010.

FiOS’ main, large competitors hold major portions of the market. Comcast is responsible

for holding the largest market share at 37.4% followed by Liberty Media Corporation with 20.5%

of the market share (IBIS World). Comcast’s new service, Xfinity already has sales of $955

million. There’s no question Comcast has the greater head count. With 1.6 million

Massachusetts subscribers, Comcast is far out in front of Verizon FiOS, which has 226,000

customers in the state, and is expanding one town at a time as it re-wires communities to run its

FiOS system (The Boston Globe). Although Comcast has the most market share, FiOS is not far

behind. Thanks to its popularity, more than 3.2 million subscribers now use FiOS. Also ahead of

Fios, DirecTV boasts 18 million subscribers and sales of $6.5 billion in sales (Dish-Television).

Time Warner, the third big player 16 million customers but offers a higher priced service thus

showing sales of $8.4 billion dollars.

SWOT

Strengths Weakness
Strong domestic wireless segment Weak performance of Wireline division
Growth in Verizon's FiOS subscribers
Opportunities Threats
4G wireless network Intense competition

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Strengths

 Strong domestic wireless segment

The company's domestic wireless segment reported strong performance in the recent years.

Revenues from the segment grew by 15.3%, 12.4 %, and 25.9 in 2007, 2008 and 2009

respectively. Continuous strong performance of the domestic wireless segment, representing

57.4% of Verizon's total revenues in 2009, helps it to retain market position and enhances its

brand image (10-K).

 Growth in Verizon's FiOS subscribers

By the end of the fiscal year 2009, the company had 3.4 million FiOS Internet and 2.9 million

FiOS TV customers. The company added approximately 943,000 net new FiOS TV subscribers

and also improved the penetration rate from 20.8% in 2008 to 24.5% in 2009. Furthermore, the

company also added 952,000 net new FiOS Internet subscribers during 2009 (Hoover’s).

To further differentiate its fiber optic platform, the company is also introducing a steady stream

of new features such as photo sharing, Facebook, Twitter and Caller ID on the TV screen. They

are also working with developers to encourage innovation for the home environment. Strong

growth in Verizon's FiOS television and high-speed Internet subscribers will offset some of its

continued Wireline losses and improve its financial performance (Alexander Grundner, 2009).

Weakness

 Weak performance of Wireline division

Verizon Business has declined in the recent years. Wireline's revenues in 2009 declined by 4.4%,

compared to 2008, and decreased by 1.1% in 2008, compared to 2007. The decline in revenue is

due to lower demand and usage of the company's basic local exchange and accompanying

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services (10-K).

The company's global wholesale revenues in 2009 decreased by $723 million, or 7%, compared

to similar periods in 2008, due to decreased use of traditional voice products and continued rate

compression from competition in the marketplace. Weak performance of the Wireline division

will negatively affect the financial performance of the company (Hoover’s).

Opportunities

 4G wireless network

The next great wave of wireless innovation begins with the fourth generation (4G) of wireless

technology. 4G will integrate wireless broadband, providing enhanced connectivity between a

wide variety of traditional and non-traditional wireless devices such as cameras, multi-player

games, household appliances and health monitoring devices. The company will begin deploying

the nation’s first 4G network based on long-term evolution (LTE). Verizon plans to launch its 4G

network in 25 to 30 markets in 2010 and virtually cover the entire nation’s 3G footprint by the

end of 2013. Development of 4G wireless broadband network using LTE technology will enhance

the services offered by the company and generates incremental revenues (CIO Insight).

Threats

 Intense competition

As mentioned in previous sections, Verizon faces intense competition in the Wireline and

wireless industry through companies and providers such as telephone companies, cable

companies, wireless service providers, satellite providers, and providers of VoIP services. Its

main competitors are AT&T, Sprint Nextel and T-Mobile. In addition, in many markets the

company also competes with regional wireless service providers, such as US Cellular, Metro PCS

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and Leap Wireless (IBIS World).

Recommendations

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Creative Strategy

For our TV commercial, we decided to take a less informative and more creative and mysterious

approach that piques consumer interest and draws attention to our social media campaign.

Imagine, a town that is black and white, making everything look and feel very dull. A

certain family has very uneasy and dissatisfied children. The children are looking out the window

when they see a quick flash of light fall from the sky. The children without the parents’

permission run to see what it is. They discover that it is a glowing ball with color and confused,

because of never seeing or experiencing such color, run back home with the ball to show to their

parents. As soon as they bring it in the whole family puts it on the common room floor. The light

travels to the television, phone, and their family computer. The light proceeds to add color to

the whole house including the family. People in the town gather around that one house to see

what happened to the certain family’s home.

Since our slogan or question is going to be, “The World is Brighter With FiOS“ and “Have

You Seen the Light?” we thought this story would fit very well. The logic behind the idea was

that Verizon FiOS fiber optic technology gives out light and makes everything more colorful and

interesting. Through this storyboard we are making Verizon stand out in quality and experience

rather than price. The family also magnetizes the homey image that Verizon gives. Since adults

with children are more likely to pay for top-notch cable services (Mediamark), this imagery

relate to target consumers mindsets and pathos. The kid’s interest also gives the vibe that this is

a very trendy and hip product. Verizon FiOS has a very unique and innovative fiber optic

technology that our target consumers value, which is behind the symbolism of the ball giving

color to a black and white world. That concept is also a subtle comparison saying that FiOS is the

new leader in the industry.

We kept a similar theme in our print and outdoor ads. We integrated our slogan from

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the commercial, “The World is Brighter with FiOS” and focused on grabbing viewer attention

than pushing product price points. Print ads under our campaign depict a night aerial photo of a

city where FiOS is available, the lights and colors symbolize both the clarity of FiOS quality TV as

well as being the forefront of technology. At the top is a glowing banner with the slogan and at

the bottom is brief information about the service and a link to our website. We wanted to move

away from competitive pricing as the basis of our advertising and come to a more creative

approach that drives people to the website which provides the bulk of the product specs. The

color, symbolism, and simplicity goes away from Verizon’s traditional method of throwing large

copy specifying plans and does better at piquing interest without overwhelming the viewer with

details. A different version of the ad could be featured for each city without adding too much

extra cost, allowing customers to relate better to the ad, and have a better image of Verizon

FiOS.

The sales promo ad in the form of an email or circular takes a more traditional approach

toward cable advertising. The ad is meant to inform customers new and old about the

Quadruple Play which ads wireless to the normal TV, phone, and Internet bundle. This idea

came from consumers desire to simplify the billing process, and since Verizon has a thriving

wireless business, adding it to the bundle could be a source of competitive advantage. The ad

features a suburban house with a smiling family and all elements of the quad play. The Verizon

3g map is clearly visible above the house and the TV, phone and Internet take the place of the

garage doors. The copy, integrated into the sky above and road below, emphasizes the elements

of the plan, a base price, and plays up the fact that all this is available on one bill.

Reasoning

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The largest portion of our budget will be dedicated to television advertising. We will be

placing commercial ads on the following networks: ABC, CBS, Fox, NBC as well as cable channels

such as ESPN, CNN, Food Network, and HGTV. These stations are ideal for FiOS advertising

because they target viewers that are most interested in and likely to purchase Verizon FiOS

television services. We plan to place our advertisements during primetime in order to attract the

most attention from our target markets. The following programs and their corresponding

networks are the most effective placements for FiOS in our opinion:

 ABC

• Extreme Makeover, Desperate Housewives, Dancing with the Stars, Modern

Family, Grey’s Anatomy, College Football

 CBS

• 60 minutes, Two and a Half Men, Big Bang Theory, CSI

 Fox

• Family Guy, House, Glee, Bones, Fringe

 NBC

• Sunday Night Football, Chuck, The Event, Biggest Loser, The Office

Television commercials will be run intermittently on the aforementioned programs.

According to Mediamark, these television networks have proven to attract people involved in

buying televisions as well as those who favor sports packages that FiOS offers.

Along with television ads our campaign will print ads in a selection of magazines. We will

be placing print advertisements in the following magazines: ESPN, Family Circle, Sports

Illustrated, Business Week, Men’s Health, Fortune, GQ, and Better Homes and Gardens. These

selections allow us to gain exposure to men, women, and families as well as under-represented

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Asian markets that frequently read business magazines. (Mediamark).

In addition to television and print media, we will also be placing advertisements on

billboards in ten of the largest cities where FiOS is available to consumers. We made these ads

available mainly in the northeast, in the ten largest FiOS wired cities (Fiber for All). Cities such as

Baltimore, New York, and D.C contain a large portion of our target markets as well as the highest

clusters of current customers. According to Gaebler Ventures, billboards are a relatively

inexpensive way to get a message across to the general public compared to other forms of

advertising. In addition to billboard advertisements, we will also reach men aged 18-34 by

placing large banners inside of football and basketball stadiums for visitors and viewers to see.

Lastly, we will be appropriating a share of our budget to radio advertising, which has

proven to be inexpensive and effective. Strategic Media, Inc. suggests that the advantage of

radio advertising is a unique combination of high reach, high targetability, and low cost. We will

be placing radio advertisements on ten radio stations attractive to our target market of men

aged 18-34. Research shows that 63% of radio listeners are male adults between the ages of

25-34, which account for almost 28% of the total audience (Strategic Media). These radio

advertisements will consist of 30-second broadcasts during the rush hours of the day when

people are most likely to listen to the radio.

Sales Promotion

In an attempt to reach new customers, we will be setting up a stand inside Verizon

Wireless stores where potential customers can try out the FiOS service. This will be an effective

method of gaining new customers because although Verizon customers may be solely wireless

customers, they may not use FiOS for their cable and Internet services. Consumers tend to enjoy

the convenience of having a simple bill. To appeal to this trend, we considered adding wireless

services to the triple play as a source of competitive advantage. This promotional effort will be

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accompanied by inserts in the Sunday papers. According to Shultz, this method of couponing

often works quite well, since it encourages consumers to make a purchase when they are

actively considering the merits of the service.

Direct Mail

In an effort to retain current customers FiOS will dedicate a portion of its budget to

direct mail advertising. FiOS will use its database of customers and prospects to solicit email

advertisements to current FiOS customers. These advertisements will discuss FiOS news and

upcoming promotions with customers in an attempt to keep people loyal and interested in FiOS.

Additionally, FiOS will also spend a portion of our budget to include advertisements in

fantasy football e-mail newsletters through FantasyPlayers.com. These newsletter

advertisements will be effective in reaching our intended audience because of the extensive

reach of the FantasyPlayers.com network. FantasyPlayers.com offers e-mail advertising in their

weekly newsletter that has over 60,000 opt-in subscribers (FantasyPlayers). Research shows that

93% of people who play fantasy football are men. Furthermore, the age group for fantasy

football ranges from 12-48, with ages 25-34 being the strongest demographic (The Fantasy

Football Times).

Internet

Since Google has acquired YouTube in 2006, advertisements on YouTube have proven to

be a successful method of grabbing viewers’ attention. Currently the world’s largest online video

community, YouTube presents advertisements to over 300 million users worldwide, 55% of

which are men and 37% are people aged 18-34 (YouTube).

In addition to YouTube advertising, FiOS will also be implementing a social media

campaign on Facebook and Twitter. These social media campaigns will focus on presenting the

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transparency between customers and the company. We believe that these campaigns will

facilitate in addressing customers’ opinions and needs on their current FiOS service.

Additionally, the social media campaigns will allow prospective customers to realize the value

and benefits of FiOS from current customers’ perspectives. By using social networks, it is

possible to gain valuable exposure to people whom FiOS on a more personal level. (Search

Engine Land).

Public Relations

As for public relations, FiOS will be establishing a partnership with ABC’s Extreme

Makeover. Episodes will feature FiOS services that are included in home makeovers. KraftMaid

Cabinetry has secured a partnership with Extreme Makeover that has proved to be extremely

successful. KraftMaid comments on the relationship by stating that they “remain humbled by

the outpouring of love and community involvement that goes into each and every episode.

Across the United States, we are honored to have this unique ability to take such an active role

in projects that don’t just change homes—they change lives.” We believe that FiOS will benefit

in a similar manner from such a partnership, taking an interest in helping the community as well

as strengthening the Verizon brand image.

Personal Selling

Personal selling efforts will consist of college campus representatives hired to sell and

demonstrate Verizon’s FiOS service. Verizon will employ three college students at ten different

universities to promote and sell FiOS cable service. These thirty campus representatives will

work part-time thirty-six weeks out of the year. Salesmen are beneficial to our organization

because they explain to customers how well the service they are selling can satisfy the

customer’s needs. Salesmen give customers an opportunity to make more enquiries about our

service, which helps to match the customer’s needs and the service (Personal Selling).

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Media Recommendations

Using the percent of sales method for budgeting, we have about $412,500,000 to spend on this

campaign. We compared this number to those of our competitors and based on our position in

the industry, the number seemed about right. In 2010, the leader, Comcast has been spending

about $653 million. Other competitors, DirecTV and Time Warner spend $428 million and $1.8

billion respectively. Time Warner’s expense is spread over all of the company’s brands, which

explains the high amount (AdAge). Below is a comprehensive explanation of how our budget will

be allocated.

• Advertising

There will be a commercial with the new slogan “I have seen the light” on prime time of

different network and cable TVs. The commercial will run from Monday to Thursday and

Sunday for 28 weeks, which include the Super-Bowl season and holiday seasons. The total

cost is $128,570,476, with $34,232,660 spent on ABC, $18,134,872 on CBS, $28,345,800 on

Fox, $27,857,144 on NBC, and $20,000,000 on cable TV.

As for print advertising, the choices of magazines are spread between different target

markets. All the advertising will be full page and color with one-year circulation. To target

families, there will be $5,832,000 spent on Better Homes and Garden and $3,177,600 on

Family Circle. To target young males, $2,261,460 will be spent on Men Health, $1,849,976

on GQ, $2,336,256 on ESPN and $4,233,600 on Sports Illustrated. To target Asian Americans

who generally read more business magazines, one-year full-page ads will run in Business

Week and Fortune totaling $6,011,200 and 1,494,000 respectively. The total cost of print

media advertising will be $27,146,392.

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Radio ads will be broadcasted every weekday, once every hour of the three rush hours

in the morning and three in the evening, trying to take advantage of the captive audience.

This costs $165 per 30-second slot in the D.C. area, for a total of $990 per day per station.

There are five stations in the D.C./Baltimore metropolitan area and we want ads to run in

ten major cities including New York, Boston and Los Angeles. Excluding weekends, there are

260 weekdays a year, thus the radio programs will cost a total of $12,870,000.

Verizon already has a large advertising presence in sporting arenas and we want to keep

that up. Placing ads for FiOS in NBA and NFL stadiums in 10 major cities will cost

$25,000,000.

Asian Americans are one of the major target market segments for our campaign. Outdoor

advertising will be used to target this group. Compared to billboards that are only used

along highways, large posters using Asian-American figures, posted at center of major cities

will be more cost-efficient. These ten cities are Los Angeles, New York, San Francisco,

Honolulu, Chicago, Sacramento, Washington D.C., Seattle, San Diego, and Boston (MPA).

The average cost for one city is $5.2 million a year, which makes the total cost for ten cities

$52 million (ClearChannel).

• Sales Promotion

We decided to stop sending out mail promotions and focus on inserts in the Sunday Paper.

These circulars will be distributed around the country to build brand awareness as well as

inform potential customers about price points and promotions currently in play. These

circulars will cost $14,875,000.

• Direct Mail

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E-mails will be sent out to existing customers with FiOS news and promotions. The email

stream focuses on retention and the design and up keep will cost $100,000. Ads for FiOS will

also appear in Fantasy Football News Letters every week, which only costs $2,800.

• Internet

The banner ads on network TV sites such as Fox.com, ABC.go.com and CBS.com will cost

$13,440,000 in total for 365 days. Because the cost is per thousand images, the total times

the ad appears will depend on the general traffic of the website. According to

Statbrian.com, a website similar to Google Analytics, Fox.com has approximately 3,029,614

visits per day. Rounding this number to 3,000,000 as an average for these TV websites and

multiplied by the CPM results in a total of $13,440,000 dollars for the year.

Also the viral campaign “I’ve Seen the Light” will be created on several social media sites

including Facebook, Twitter, and YouTube. People will be asked about their worst and best

experience with cable, and how long can they live without cable. They can also upload

homemade video clips on YouTube, which will be shared and connected to the Facebook

Verizon page. The production costs and upkeep are estimated to be $500,000 dollars.

• Public Relation

"Extreme Makeover" is a show where they redo some one's house that deserves to have a

better home, and a lot of companies donate products or services to the house and have it

show up on TV. Verizon FiOS can foster a partnership with the show and offer a free FiOS

package to the families on the show. This is a charity-based activity and can help the

company in public relation. The partnership is anticipated to cost around $4,000,000 include

the shows production and labor involved in building the house as well as the cost of FiOS

25

services.

• Personal Selling

Personal selling can be done through students as campus representatives, which Verizon has

currently started. The representatives will get hourly wage around $15 dollars an hour

depends on the district, and contract-based commission every time they find a new

customer. For ten cities over 36 weeks, this is expected to cost $162,000 for a year.

Rejected Alternatives

With as immense a budget as we were given on this IMC campaign, we were hard

pressed to reject any ideas we came up with early on. In the end, we as a group decided it would

be better to make our campaign count than waste money placing ads in places that might not be

effective.

The first idea we threw out was direct mail in the form of actual pieces of mail. Research

showed that our target audience prefers to get promotions through email and through this

medium we could make the experience more enjoyable and interactive. Verizon mailers are

generally filled with intense amounts of information and copy in various sizes. While the ads are

stylish, they can be overwhelming. By using an email, we can simplify the face of the message

and through links, direct consumers wherever we want them to go.

We considered similar data when we sat down to brainstorm ideas for our commercial.

26

We originally came up with a commercial that was fairly consistent in nature to current Verizon

ads, employing a bit of humor and emphasizing features and price points. We knew a few things

however: first that our customers valued new technology, they generally had high incomes

(meaning they can afford the product), and they tended to be younger. We had also allocated

some of our budget to a social media campaign that we wanted to attract attention to. With all

that in mind, we switched our idea to a more mysterious one, featured in a nice part of the city

and using symbolism to convey advanced technology. The ad didn’t say much about the

product, though it did show elements (TV, phone, and internet) and rather than forcing

information into the minds of consumers we attempted to pique interest and drive traffic to the

website for the social media campaign.

27

Print Ad New York

29

Print Ads Boston

30

Sales Promotion: Sunday Circular

31

Current Verizon Mailers

32

Tables and Consumer Data
Market Size and Growth

Leading Companies (# of Subscribers)

35

Advertising Expenditures of Leading Companies

Household Penetration

36

Viewing Habits

Reasons to Change Service by Age and Income

37

Total IMC Expenditures
Bucket Section Total for Year

Total Budget $412,500,000

Production Cost $350,000

Advertising
Network TV $108,570,476
Cable $20,000,000
Print $27,146,392
Sports $25,000,000
Radio $12,870,000
Outdoor (Billboards) $52,000,000
Extreme Makeover Product Placement In PR
Total $245,586,868

Sales Promotion
Sunday Circulars $14,875,000
Email Streams In DM
Total $14,875,000

Direct Mail
Email Streams (Retention Focused)
Design/upkeep $100,000
Ads in Fantasy Football News Letter $2,800
Total $102,800

Digital
Banners on Network TV sites (e.g. Fox.com) $13,440,000
Social Media/Viral Campaign $500,000
Total $13,940,000

Public Relations
Extreme Makeover Partnership $4,000,000
Total $4,000,000

Personal Selling
Campus Representatives $162,000
Total $162,000

Total All Buckets $279,016,668

38

Television Breakdown
Mon-Thurs and Sun, 1 ad per show, over 28 weeks
ABC 1ad x 28wks x $1,222,595 $34,232,660
Extreme Makeover
Desperate Housewives
Dancing with the Stars
Modern Family
Grey's Anatomy
College Football
CBS 1ad x 28wks x $657,674 $18,134,872
60 Minutes
Two and a Half Men
Big Bang Theory
CSI
Fox 1ad x 28wks x $1,012,350 $28,345,800
Family Guy
House
Glee
Bones
Fringe
NBC 1ad x 28wks x $99,898 $27,857,144
Sunday Night Football
Chuck
The Event
Biggest Loser
The Office
Cable 1 ad/show, 28wks each $20,000,000
ESPN
Sports Center
NFL
NBA
CNN
Situation Room
AC 360
HGTV
Food Network
Total 128,570,476

39

Print Media Breakdown
1 Ad per Issue, Full Page Color for 1 year
Publication Cost
ESPN ($194,688 x 12) $2,336,256
Family Circle ($264,800 x 12) $3,177,600
Sports Illustrated ($352,800 x 12) $4,233,600
Business Week ($115,600 x 52) $6,011,200
Mens Health ($188,455 x 12) $2,261,460
Fortune ($124,500 x 12) $1,494,000
GQ ($154,165 x 12) $1,849,976
Better Homes and Garden ($486,000 x 12) $5,832,000
Total $27,196,092

40

Business Articles:

Verizon: Take That, Cable
It seeks to reclaim lost ground with a gutsy plunge into pay-TV
services
Reality TV doesn't get any more painful than this. The cable-television companies have smacked
around their telecom rivals in broadband over the past few years, grabbing most of the fast-
growing market. Even worse, the cable players have started to swipe customers in the traditional
voice market in recent months. "Cable companies have emerged as telecom's fastest-growing
threat," says Brian Adamik, chief executive officer of researcher the Yankee Group (RTRSY ).
Now, Verizon Communications Inc. (VZ ) is striking back. BusinessWeekhas learned that the
nation's largest telecom provider is preparing to seek cable-TV franchises in parts of Texas and
eight other states so that it can offer video in head-to-head competition with cable companies.
The service would provide a powerful new source of competition in the pay-TV market, where
most consumers have a choice of one local cable-TV company and two satellite operators.
Although Verizon won't comment on specific TV plans, it has confirmed that it's building a system
capable of carrying the service this year. The company will deliver signals over fiber-optic lines
that it's connecting directly to homes and offices. It plans to offer digital TV, videoconferencing,
and movies-on-demand either this year or next. Says Paul A. Lacouture, who oversees Verizon's
network and is in charge of the project: "The battle is going to get a lot more intense."

$1 BILLION ROLLOUT
More intense and more expensive. Verizon expects to spend about $1 billion on the first phase of
its rollout, making fiber lines available to 1 million homes by this fall. The Texas markets will
include Keller, a suburb of Dallas. Although the identities of the other eight states could not be
learned, one is likely to be California, a person familiar with the strategy says. Verizon plans to
offer the service to 1 million more homes next year and a total of 12 million by 2008. Over the
next 15 years, Verizon expects to spend $20 billion to $30 billion to extend service to nearly all 35
million customers.

Television is only part of the strategy. The new fiber-optic lines also will allow Verizon to offer the
most advanced consumer broadband service the U.S. has ever seen. Internet connections of up
to 30 megabits per second, more than 10 times faster than a state-of-the-art cable modem or
digital subscriber line (DSL), will be possible, Verizon executives say. Five- and 15-megabit
versions will be available for customers who don't require all that juice. Although specific pricing
hasn't been decided, the 5-meg version will be competitive with cable modem service, which
typically costs $40 to $45 a month. Eventually, if there's demand for it, Verizon intends to offer
consumers Net connections of 100 megs or more.

Cable rivals in Texas insist they're not quaking in their cowboy boots. For one thing, Verizon has
tried this before. Its corporate predecessor, Bell Atlantic Corp., unveiled grand plans to offer pay
TV to its customers on the East Coast during the 1990s, but the project failed because of high
costs and technological problems. Even if Verizon can make the economics work this time, it has
no experience in entertainment, where it will have to face off against Time Warner Inc. (TWX ),
Comcast Corp. (CMCSK ), and other powerful rivals. "We are already in a highly competitive
marketplace. We face satellite in every market we are in," says David Mack, a spokesman for
Charter Communications Inc. (CHTR ), which provides cable service in Keller. "We believe we
will do just fine because we offer superior choice, price, and quality of customer care."

RAW FEAR
Verizon's TV sequel may fare better than the original production, however. For one, equipment

41

has gotten cheaper and more reliable in the past 10 years, even as the market has grown. Digital
set-top boxes, for example, cost about 50% less than they used to. And new network designs
have lowered the expense of construction by more than 50%. A fiber connection now costs
$1,100 to $1,700, depending on whether the cable is buried or strung from an easily accessible
telephone pole. That is only 10% more than the cost of installing a regular copper phone
connection.

Just as important is the motivational force of raw fear. Without an effective video strategy, the
Bells likely will lose 30% of their telephone market to cable companies over 10 years, estimates
analyst John C. Hodulik of UBS (UBS ). He believes losses could be limited to 15% if telecom
companies can provide video -- because consumers are more likely to remain with a carrier when
they purchase a bundle of services.

Verizon's peers are more cautious. BellSouth Corp. (BLS ) is testing fiber technology, and SBC
Communications Inc. (SBC ) is planning to offer video service over fiber optics in some new
housing developments this year. But no mass deployments are planned. "I'm not sure it's going to
make sense to take fiber all the way to the home in existing neighborhoods," says Jeffrey G.
Weber, vice president of corporate planning at SBC. So far, Verizon is on its own in its aggressive
response to the cable threat. But if this gamble succeeds, it could prove to be the catalyst for a
new generation of communications in the U.S.

42

Technology - Cable TV Viewers in the US - Business Environment Report
Apr 19 2010
This report analyzes trends in television (TV) cable viewing, measured by the total number of
cable subscriptions at the end of each year. It does not include satellite or telco based television
subscription services. Cable television provides television viewing to consumers via optical fibers
or coaxial cables as opposed to the over-the-air method used in traditional television
broadcasting (via radio waves) in which a television antenna is required. Cable TV is a popular
form of television delivery in the US, although it requires a subscription. The data for this report is
gathered from the National Cable and Telecommunications Association (NCTA).
Latest Data
According to the NCTA, the total number of cable subscriptions was 63.1 million in June 2009.
IBISWorld expects the number to fall to 62.9 million by the end of the year. This will represent a
decline of 1.3% compared to 63.7 million at the end of 2008. Anemic growth in disposable income
and concerns of rising unemployment are causing consumers to be careful with discretionary
purchases and cable TV may be seen as an unnecessary luxury.
Growth in the number of US households has also slowed, decreasing demand for new
subscriptions. Growth in US households has slowed due to a drop in construction following the
subprime mortgage crisis and subsequent oversupply of housing. Furthermore, young people are
opting to live at home longer with their parents. Initially, before the recession, high housing prices
made it hard for young people to enter the housing market. While house prices have now fallen,
unemployment is rising and credit conditions are tighter making it harder to borrow money.
Census Bureau data shows that in 2007 there were 3.6 million parents living with their adult
children in 2007, an increase of 55% compared to 2000.
Five Year Trend
Over the five years to 2009, the total number of cable TV subscriptions decreased at an
annualized rate of 0.8%. The number of cable TV subscription remained stable over 2005 and
2006 as growth in disposable income offset a loss of market share to satellite TV and people
increasingly using the computers and internet as substitutes for television. This stability in cable
TV subscribers followed three years of declines following the 2001 recession. Also, cable TV
penetration is believed to have reached a ceiling. The internet has been a good substitute for
news and general information for many years. Over the past five years, video media, has become
more accessible and helped the internet to become more of a substitute for television. The ability
to download movies and television shows from the internet (legally or illegally) has resulted in
further losses of subscribers.
As economic conditions worsened starting at the end of 2007 and unemployment began to creep
up, disposable income growth slowed. Coupled with rising internet penetration and the cheaper
substitutes on offer online, the number of cable TV subscribers declined in 2007 and continued to
fall over subsequent years.
Data Volatility Analysis
The data for the number of cable TV subscriptions exhibits a low level of volatility. The household
penetration rate of cable TV has reached saturation point, following strong growth in the early
90's, and double digit growth in the late 70's and early 80s. Growth in the number of cable TV
subscriptions is linked to levels of disposable income. Higher disposable income leaves more
money for discretionary purchases such as cable TV. The number of cable TV subscriptions is
also related to the market share of satellite and telco based TV services. Finally, the number of
US households also has an impact on cable TV subscriptions, affecting the number of potential
new subscriptions.
Historical Analysis
Cable television was first introduced into the US in 1948 and began signing up subscribers in
1949. By 1975, 9.8 million households had the luxury of watching cable, and that number is eight
times higher in the late 2000s.
The key feature that distinguishes cable programming from broadcast television is the additional
bandwidth of cable television which allows channels to cater more specifically to particular
demographics and interests. In addition, cable is less reliant on revenue from commercials which
allows them to not be tied to ratings. Cable television is also able to more freely feature themes
which broadcast television would deem unacceptable.

43

Since the inception of cable television, broadcast networks have seen the cable industry as a
threat. In the 1960's, the Federal Communications Commission responded to network concerns
to restrict the importation of distant broadcast signals by cable companies. Throughout the 1970's
however, restrictions on the industry were slowly lifted, and cable developed as a legitimate
alternative to broadcast networks. Despite this, only 20% of households had access to cable in
1980.
Additional legislation enacted in the last 20 years gave the cable industry additional freedom.
Between 1984 and 1992, more than $15 billion was spent on cable infrastructure, and the number
of cable networks tripled in this time. This trend continued in the 1990's, though prices remained
high for consumers.
The gradual introduction of digital services has led to a spike in cable subscription numbers in the
last few years, with $84 billion invested into digital infrastructure between 1996 and 2003. As a
result, digital subscriber households have increased from 1.5 million in 1998 to over 21.5 million
in 2003, and the main competition to cable has now become satellite television rather than
broadcast networks.
The number of subscriptions fell over from 2002 and 2004 as the US economy was recovering
from a 2001 recession. Unemployment was high, income growth was low and relative affordability
meant that people had to cut back on discretionary items.
Outlook
IBISWorld predicts that in 2010, the total number of subscriptions will fall by 0.4% to 62.6 million.
Economic growth is expected to recover but remain slow in 2010. Continuing high unemployment
will lead consumers to cut back on discretionary spending, while growing Internet penetration will
offer cheap substitutes for many of cable TV's services.
Economic growth is expected to slow in 2011 as government stimulus projects come to an end
and growth in consumer spending remains low. High levels of private debt accumulated prior to
the recession will need to be repaid to manageable levels and this will slow growth in consumer
spending. Low levels of consumer spending will cause cable TV subscription numbers to drop
slightly.

As the recession and consumer spending increase, a small rise in cable TV subscription is
expected due to pent up demand. However, over subsequent years, the number of cable TV
subscriptions is forecast to trend downwards as satellite and telco based TV services increase
their market share. Most importantly however, increasing Internet penetration and faster Internet
speeds will bring affordable streaming media capabilities to more households. As Internet
services offering television shows and movies grow and become more popular, cable TV, and
pay TV in general is expected to suffer. Additionally, higher taxes are expected when economic
growth returns to healthier levels. The government will need to pay back the massive public debt
accumulated through bailouts and stimulus packages and will be forced to raise taxes.

Time Warner Cable, Verizon
Push to End TV Blackout
Threats
July 14 (Bloomberg) -- Time Warner Cable Inc. and Verizon Communications Inc., competitors for
pay-television services, joined forces today in a group urging federal regulators to change the
rules allowing broadcasters to cut their signals during contract disputes.
The new American Television Alliance was created as New York-based Time Warner Cable

44

attempts to reach a new agreement with Walt Disney Co., which owns the ABC television
network. Other members include Dallas-based AT&T Inc., the largest U.S. telephone company,
DirecTV, the largest U.S. satellite-TV provider, as well as cable networks and public interest
groups.
“We’re not saying programmers shouldn’t get fair compensation for their content, it’s just the way
the rules are written today hold the consumer hostage,” said Alex Dudley, a spokesman for Time
Warner Cable. “If a diverse group of competitors can come together to form a coalition like this, it
means that something is clearly broken.”
Absent from the coalition is Comcast Corp., the largest U.S. cable-TV company. The
Philadelphia-based company is seeking government approval for its proposed takeover of
General Electric Co.’s NBC Universal.
Dennis Wharton, a spokesman for the National Association of Broadcasters, the Washington-
based trade group, said broadcast- network programs are popular with viewers, and disputes with
pay-television services are rare.
“Pay TV providers built their businesses on the backs of local broadcast signals, and
broadcasters deserve fair compensation for the most-watched TV programming,” Wharton said.
FCC Request
Several members of the pay-TV group, including Time Warner Cable, Cablevision Systems
Corp., El Segundo, California-based DirecTV, and New York-based Verizon, whose Fios system
competes with cable and satellite companies, had asked the Federal Communications
Commission in March to consider requiring broadcasters to maintain their signals during disputes
and to require arbitration when the two sides can’t agree on the fees for what is known as
retransmission consent.
“Many of the broadcasters are demanding excessive increases in fees,” said Tom Cullen,
executive vice president of Dish Network Corp., an Englewood, Colorado-based satellite-TV
provider and another member of the group. “We just have to fight this battle to keep consumer
prices reasonable.”
The alliance, which is launching a website and advertising campaign, also plans to ask members
of Congress to urge the FCC to examine the need to change the rules.
‘War’ of Attrition
The broadcasters’ association, whose members include Disney and the Fox network, has urged
the FCC to reject the petition. Such proposals would give pay-TV providers “a financial incentive
to eschew meaningful negotiations and engage in a war of economic attrition with local stations,”
the broadcasters’ group said June 4.
Bethpage, New York-based Cablevision faces negotiations later this year with New York-based
News Corp., which owns Fox. Burbank, California-based Disney pulled ABC programming from

45

Cablevision on March 7, blacking out the first 13 minutes of the Oscars telecast for more than 3
million customers in New York, Connecticut and New Jersey, until the two companies reached a
preliminary agreement.
Zenia Mucha, a Disney spokeswoman, and David Fish, a spokesman for Verizon, didn’t return
calls seeking comment.
Broadcasters have said they should be compensated for supplying their programs, which are the
most watched on television. In the past, the networks traded those rights to gain distribution for
new cable channels, such as Disney’s ESPN2, or higher fees for existing cable networks. Pay-TV
companies have balked at paying for broadcast programs because viewers can watch those
shows free on over-the-air networks.
--Editors: Bob Drummond, Mark Silva.

Comcast, Verizon battle it out for market
share
Just listening to the advertising - and there’s plenty of advertising - at any given moment, an
unwary consumer of cable services might get the idea that eitherComcast Corp. or Verizon
Communications Inc. has the best deals, the most amazing TV pictures, and Internet speeds to
dazzle the cyber gods. But in the end, what’s the real difference in what each company offers?
Comcast has 1.6 million Mass. subscribers
Verizon FiOS has 226,000 customers in the state
The question is academic in Boston. The ferocious competition makes it seem as if the two
companies are slugging it out in the streets - and can overwhelm earthbound rivals with less local
presence, like RCN Corp., or satellite services, like DirecTV Inc. and Dish Network - but Verizon
has yet to bring its FiOS cable TV and Internet service to the city, a Comcast stronghold.
But it’s not clear what Boston residents are missing, and it’s difficult to make a definitive
judgment about which company offers better quality, service, or price. Cable services are thinly
sliced into component offerings - a melange of cable movie channels here, a dash of staggered
Internet speeds there - and offered in packages different enough to prevent apples-to-apples
comparisons.
But based on interviews with customers, industry analysts, and the cable carriers themselves,
Verizon has an edge in some places where Comcast customers are still on legacy systems - older
cable networks set up by companies it has acquired over the years. But that difference is rapidly
disappearing as Comcast upgrades its Bay State offerings.
There’s no question Comcast has the greater head count. With 1.6 million Massachusetts
subscribers, Comcast is far out in front of Verizon FiOS, which has 226,000 customers in the
state, and is expanding one town at a time as it re-wires communities to run its FiOS system.
Verizon touts the picture quality and Internet speed made possible by its FiOS, which it’s building
at a cost of $23 billion nationwide. FiOS, which reaches more than 100 Massachusetts
communities, runs on a network of fiber-optic cable to the customer’s home, with a short length
of traditional coaxial cable that runs into the home and attaches to set-top boxes and cable
modems. Fiber-optic cable delivers much more data capacity than the old metal and plastic
coaxial cable. Verizon spokesman Phil Santoro said that FiOS is “giving customers the ultimate
TV viewing experience currently available in the marketplace.’’
Comcast replies that it’s also got an fiber-optic network, although in the Comcast model, the fiber
runs to neighborhood “nodes,’’ and coaxial cable runs from the nodes to customer premises. In
addition, Comcast is in the middle of major investments to enhance its network to add more high-
definition TV channels and faster Internet speeds, and to make significant improvements in

46

customer service. The company recently said it will re-brand its cable services under the umbrella
name Xfinity.Continued...

Verizon FiOS: A New Dog Learns Old
Tricks
Posted by: Stephen Wildstrom on June 01, 2009
V erizon communications hasn’t been at the business of delivering television to subscribers’
homes for very long, but it has already developed some of the worst habits of the incumbent
cable companies. I’ve generally been happy with my Verizon FiOS service since switching from
Comcast some months ago. In particular the quality of the high-definition TV signal that Verizon
delivers is significantly better than Comcasts’.
This week, however, I got a sense of the extent to which Verizon has turned into a cable
company. I finally got around to replacing an ancient analog TV in the kitchen with an inexpensive
HD set. My one requirement for the TV wat that it have an HDMI input, which allows a single
cable to deliver audio and video from the set top box. But when I went to hook up the new set to
the Motorola box from Verizon, I discovered that it was a standard-definition box with neither
HDMI nor component outputs.
My wife took up the chore of finding out how to exchange the box for an HD box. She immediately
encountered a run-around worthy of any cable company: customer service reps who could not
handle a simple request (including the location of the nearest Verizon outlet that could handle the
exchange), calls the dropped while being transferred, the works. Then there was the bad news:
The HD box would cost $10 a month, up from $6 for the standard definition one (I figure that
Verizon will recover the actual extra cost in the first month.)
Former Federal Communications Commission Chairman Kevin Martin enjoyed busting cable
companies' chops, but his FCC never made a serious effort to enforce a 1996 congressional
mandate that cable operators facilitate a market for consumer-owned, retail set top boxes. It's
long past time for the new FCC to end the tyranny of the cable company-owned box, and extend
the requirement to Verizon and AT&T, which are now cable operators in all but name.

47

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