I was snookered the other day by a Verizon FIOS flyer touting a $79 combo deal. After cutting through the facade, I realized that if I wanted a similar set of services with Verizon compared to my existing Comcast offerings, I’d be paying a hefty premium. Even in the face of “better service” from Verizon, I couldn’t justify making the switch. The switchover costs are probably much more expensive than you think – here’s why:
It started with the initial flyer with FIOS splashed all over it. I recalled being offered a $99 triple play from Verizon a few months ago. At that time, I had opted not to switch since the costs didn’t justify it, they couldn’t port my number, and I was able to easily save 44% on my Comcast Bill with a simple chat session . Well, when I saw $79, I figured, “Hey, they’re really looking to court new customers now, let me check this out!”. Well, the fine print actually read that this was ONLY for “FIOS TVand phone” – internet was extra. So, this deal was no better than prior offers – actually, worse. However, since I saw this as an opportune blog post, I let the customer service rep elaborate on just what it would cost to get an equivalent package.
Current Comcast Package:
- Triple Play Bundle: Phone, Internet, cable
- Phone and Internet are basic/standard
- Cable – in addition to the typical several hundred channels, we have the HBO, Showtime and Starz packages. These come free based on the deal I worked out with Comcast when I threatened to leave for FIOS previously
- HD Package/HD-DVR
- No additional boxes needed, unlimited TVs (we have 3: kitchen, family room, master BR)
Comcast Final Cost Before Taxes: $110
Verizon Requirements to Duplicate My Current Comcast Package:
- Phone/FIOS basic – cost $79.99
- Additional for Internet – cost $40.00 (Full Triple Play Starter is $119.99)
- HD DVR – cost 15.99
- Box for Each and Every TV – cost $3.99 ea x 2 = $8 [note: many households have more than one TV]
- Premium channel Package (equiv HBA, Show, Starz) – cost $25 [note: not everyone watches premium channels]
- 1 time Signup Fee – cost $49.99 *excluded from analysis as a one-time cost
- Free gift card of some sort * also excluded from analysis as a one-time cost
Verizon Final Monthly Cost Before Taxes (excluding one-time fees/gift cards): $169
*Note that this was an introductory year offering only – I’ve heard that after the first year, Verizon jacks your rate by at least $10/month. It’s business and they’re viewed as the better game in town, why wouldn’t they? But, consider this as a future cost as well. Greater increases than your existing service provider who’s working harder to retain you.
*Verizon’s cost is net of taxes as well. Since they wouldn’t provide estimated taxes over the phone (they don’t want you to know your additional tax liability until you’re already a customer and recieve your first bill. It wouldn’t be rocket science to quote you what your neighbor’s bill says for equivalent offerings), I compared both on a pre-tax basis assuming the taxes are roughly equivalent between the two.
So, on an annual basis, you’re going to pay $59*12= $708 more for Verizon service over Comcast. Of course, I’m using a reduced Comcast cost basis, but as I outlined previously, anyone being offered both services in the same area should be able to utilize the same tactics I did to win an immediate 15-20% reduction in your bill since Comcast fears losing more customers to Verizon. I like to look at investments and expenses over multiyear periods, usually 5 or 10.
Conservatively, over a 5 year basis, you’re paying over $3500 more to use Verizon than Comcast.
What do you get?
- Verizon claims their download speeds are faster. This isn’t really a big deal to me; we’re nowhere near watching all content through the internet yet (TVs aren’t going away any time soon) and I’m not a master internet pirate uploader. Frankly, I don’t think people surfing around, shopping here and there or doing a blog post would notice a performance difference between the two.
- HD Quality – I’ve seen claims that FIOS offers a better HD picture than Comcast HD as well. Again, I haven’t noticed the difference between houses that have different services on similar HD TVs and I don’t waste away my weekends watching every football game played around the country – it’s just not that important to me. The HD quality through Comcast seems sufficient to me.
- Comcast had greater On-Demand offerings at last check. Perhaps Verizon has improved recently, but that was my last data point when I last considered.
What are your thoughts? Did I miss anything in my analysis? Is it worth the extra money?
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{ 6 comments… read them below or add one }
I personally have BrightHouse rather than FIOS but I too have received a ton of mail and other marketing pitches all touting how FIOS is supposed to be better. I am still not convinced though that the picture or speed is any better but I could be wrong.
.-= Credit Card Chaser´s last blog ..Wells Fargo Credit Cards to be Marketed to Wachovia Customers =-.
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I hate Cablevision which is why I would love to switch. But ignoring the fact that I am stuck since no one thought of laying down some wires when they built my 2007 condo neighborhood – I think the analysis ignores the “The Gift.”
When My parents signed up (again because of a sole hatred of Cablevision) they received a 19 Inch LCD, at the time it probably cost a couple hundred bucks, so that would eat it into that $500 number you provided.
.-= Evan´s last blog ..Buying Life Insurance on a Child’s Life =-.
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Comcast will normally raise rates after the 1 year period and doesn’t automatically throw in free premium channels. You got discounts by negotiating with Comcast. If you negotiate deals with Comcast then I assume you could also possibly negotiate deals with Verizon. Seems to me that the 2 will try and keep you as a cusotmer and one-up the other so if you’ve got Comaast they’ll give you deals to keep you but if you’ve got Verizon and you threaten to leave for Comcast you might also get the same kind of deals. In your situation it makes sense to stay with Comcast given the deals they’ve given you. But if you were on Verizon and had negotiated a good deal by threatening to leave for Comcast then the sitatuion would just be reversed.
.-= Jim´s last blog ..What if I made $42k? =-.
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Jim,
Thanks for your comment. To address a few thoughts:
Since FIOS is a new offering, in the vast majority of the cases, you’re looking at existing Comcast customers defecting to FIOS, not the other way around. Since there is a net defection from Comcast TO FIOS, the leverage is with the Comcast customers and existing FIOS customers have little or no leverage.
If a new FIOS customer is threatening to leave FIOS to go to Comcast, the rep will basically laugh in their face. Here’s why:
1) Since FIOS is so new, by default, the customer is still in the early cancellation period and would be facing a severe cancellation charge
2) FIOS is viewed as having a superior offering and as such, nobody’s really leaving. They’ll know you’re bluffing and politely say, “good luck. so, do you really want to cancel?”
People ARE actually leaving Comcast in droves, hence the desperate attempts to keep existing customers since acquisition costs are high and marginal costs to service a customer are negligible.
Perhaps in a few years when the novelty has worn off and if Comcast can further differentiate itself with other value offerings, there could be net defections from FIOS to Comcast, but for the time being, highly unlikely IMHO.
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Darwin, I think you’re right on all counts. I also agree with your original post that the Comcast deal is better for you right now. I was thinking more from my perspective where I live. Here, FIOS has been around for a couple years and Verizon and Comcast have been actively competing and trying to one-up the other. I get mail from both companies about weekly advertising some deal or bundle discount.
.-= Jim´s last blog ..Can you open a Roth IRA? =-.
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Good information. I’m about to switch from Verizon FIOS to Comcast, and I am doing some research. I’ve had Verizon FIOS for several years, and was pleased. But on January 19th, I stopped being able to use FTP to access the websites I maintain. The servers disconnect immediately after I access them. My laptop works fine if I use my friend’s Comcast service, but will not work with anyone’s Verizon service. Verizon FIOS tech support refuses to help. They say that if I can get on the Internet, that’s all they care about. Their tech support is worse than bad. For me it is non-existent.
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