Verizon (VZ) Sweetens SMB Services With FiOS Current TV

Large telecom operators are yet again eyeing the small and mid-sized business (SMB) service market to reclaim their long-lost glory. In the last eight to ten years, the SMB segment has become a major growth driver for the cable MSOs (multi service operators) and regional communications service providers, who have sidelined telecom operators using high-speed metro Ethernet link over the traditional T1 and DSL link.

Meanwhile, significant improvement in the business data and video traffic is expected to act as future growth catalyst for the overall telecom industry. Various industry researches estimate that the SMB segment may offer a market opportunity of $20-$30 billion in the long-run. This massive market opportunity may encourage telecom giants to restructure their SMB market strategy.

U.S. telecom behemoth Verizon Communications Inc. (NYSE:VZ) has launched a new video service, Fios Current TV, targeting the SMB segment, especially health clinics, consulting firms, restaurants, health clubs, bars, and cafes. Verizon offers two categories of services to its SMB customers, $40 per month without a contract and $30 per month with a two-year agreement. Additionally, the company is offering Current TV at $25 per month for SMB customers ordering a triple-play bundle with a two-year agreement.

Comcast Corp. (NASDAQ:CMCSA) , the largest cable MSO (multi service operator), is aggressively establishing its footprint in the SMB market with next-generation DOCSIS 3.1 near-gigabit broadband speeds and targeted programming. At present, Comcast is the market leader in triple-play services for the SMB segment.

Notably, Verizon offers fiber-optic based FiOS TV services to its residential customers. This service is similar to that of cable TV operator’s traditional video offerings. Currently, the company is on the verge of carrying out test trial runs for its IPTV upgrade. In 2015, the company launched go90, a YouTube-like streaming-video service for teenagers. However, the company is planning to merge go90 into its digital platform Oath.

Moreover, the telecom industry is currently abuzz with rumors of Verizon unveiling its much-hyped online TV streaming service by next spring. The new online video streaming service will be different from the previous two offerings as it will compete with established low-cost services like Netflix Inc. (NASDAQ:NFLX) and Amazon.com Inc.’s (NASDAQ:AMZN) Prime video.

Price Performance

Shares of Verizon have gained 8.09%, outperforming the industry’s growth of 1.97% over the last 90 days. Also, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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