Expansion Drives Growth for Verizon's Telecom Unit in 2008

NEW YORK - Verizon in 2008 expanded Internet and TV services to more customers, boosted broadband speeds and availability, added more cities to the FiOS TV service area,  provided more than 100 FiOS high-definition (HD) channels in every FiOS TV market, and introduced new, interactive TV features that now lead the television industry.

The bold initiative to build fiber-optic facilities right to customer premises is paying off, with more than 2.5 million FiOS Internet and 1.9 million FiOS TV customers connected as of year-end, each up about 1 million customers in 2008.  During the year, Verizon also continued expansion of its DSL-based Internet service and increased the fastest download speed to 7.1 megabits per second (Mbps).

"Throughout 2008, and especially in the final quarter, we waged a major assault on old-fashioned cable both by offering new services and by serving more customers," said Dan Mead, president of Verizon Telecom.  "We leveraged not only our fiber network, but our High Speed Internet assets and our partnership with DIRECTV, and created the kinds of bundles and offers that appeal to customers and will grow our business.

"The combination of our great networks, products and the experience of the Verizon team will continue to be a winning formula as we move forward into 2009," he said.

FiOS Growth and Performance

Verizon's revolutionary project to construct the all-fiber-optic FiOS network straight to homes, apartments and businesses exceeded the original year-end goal of 12 million homes passed, and the network can now serve 12.7 million homes and businesses.  Highlights include:

• The fiber network now passes roughly 40 percent of the total households in Verizon's landline footprint.

• In the final quarter of 2008, Verizon added 303,000 net new FiOS TV customers, up from 226,000 in growth the prior quarter.  FiOS TV grew by nearly 1 million customers during 2008 to a year-end total of 1.9 million customers.
• FiOS TV sales penetration based on potential customers reached 20.8 percent, up from 16 percent the prior December.
• Some 9.2 million customers can now order FiOS TV, a 57 percent increase in market size compared with year-end 2007 and a welcome sign to consumers eager to enjoy the celebrated FiOS TV and Internet services.
• Verizon launched a new wave of interactive features in its innovative Interactive Media Guide (IMG) including:
• Remote DVR Programming - Customers who subscribe to FiOS TV's Media Manager service can remotely program their FiOS TV DVRs and set their Parental Controls through select Verizon Wireless handsets and through Verizon's FiOS TV Central Web site (www.verizon.com/fiostvcentral). 

• Streaming of recorded HD video - Verizon's Home Media DVR now allows customers to stream recorded high-definition (HD) programs to six other TV sets throughout the home equipped with HD set-top boxes.  The feature, which has been available for standard-definition programming, includes the ability to watch three separately recorded shows on three sets at the same time, plus pause recorded programming in one room and continue watching in another.
• New free widgets - FiOS TV widgets offer customers one-touch, on-demand access to local weather and traffic reports shown on TV screens.  Now customers have more widgets, including daily national news and sports headlines, community news, daily horoscopes, and popular video-on-demand (VOD) titles currently available.
• Fantasy Football - FiOS TV customers who are registered users of ESPN Fantasy Football have instant on-screen access to personalized NFL statistics, including rosters, box scores, scoring leaders and player information.
• Verizon signed up an additional 282,000 FiOS Internet customers in the fourth quarter, compared with 244,000 in the fourth quarter of 2007.  There were 2.5 million total FiOS Internet customers at year end, up about a million over the course of 2008.
• FiOS Internet has a market penetration rate of 24.9 percent, based on potential customers, up from 20.7 percent a year ago.
• At the end of 2008, Verizon offered at least 100 or more HD channels in each FiOS TV market.  That led the industry, with cable competitors often offering only half as many channels or even fewer.
• The company boosted the top FiOS Internet speed to 50 Mbps in all markets and continued to lead the market with up to 20 Mbps upload speeds, including 20 x 20 Mbps symmetrical service, a significant advantage over cable services.
• FiOS TV service earned a J.D. Power and Associates award for Highest in Residential Television Satisfaction in the East Region.  As the new year began, FiOS services also were recognized by a leading national consumer magazine as being superior.

Throughout 2008, Verizon continued to aggressively market FiOS services to multidwelling unit (MDU) residential properties and multitenant commercial properties, recently passing the 1-million-unit mark for residential MDU availability. 

During the year, Verizon received approvals for TV franchise agreements in New York City and launched TV service there.  The company launched FiOS services in Washington state and western New York, and TV franchise approval was pending in Washington, D.C., and Philadelphia.   Hundreds of smaller municipalities also approved franchises during the year.

The company also began to aggressively pursue multimedia content for its broadband customers by endorsing a new, network-efficient process for peer-to-peer file delivery, creating its own content delivery network (CDN), and giving content owners and CDNs direct access to the Verizon Internet backbone.

High Speed Internet and Voice Services

Verizon also continued to improve its traditional services in 2008: 

• The company reached a total broadband customer base of 8.7 million connections, up 214,000 over the prior quarter and up 8.2 percent over the course of the year.

• During 2008, Verizon expanded availability of its up-to-7.1 Mbps High Speed Internet service to a total of more than 9 million homes, up from 400,000 as the year began.  The ultra-high-speed service allows Internet users to download information at speeds 125 times faster than 56 kilobits-per-second (Kbps) dial-up modems.
• Verizon expanded the total High Speed Internet base, making the service available in additional central offices and remote network facilities.  In rural western Massachusetts, for example, HSI was expanded to an additional 24 towns.  Significant expansions also occurred in Indiana, Pennsylvania and other states.
• High Speed Internet connections declined 68,000 in the quarter; however, many of those declines were customers switching to FiOS Internet service.
• Home access lines declined by 460,000 in the quarter, the fewest lines lost in three quarters.
• Verizon continued deployment of the most powerful fiber-to-the-premises technology, Gigabit Passive Optical Network (GPON) gear, with the goal of supporting nearly half the FiOS base with GPON equipment by the end of 2009.
• Verizon brought to market the latest in broadband home routers, making FiOS-capable homes incredibly versatile in terms of home networks and potential new links between home equipment and the Internet.

Verizon Business, which like Verizon Telecom is part of the company's wireline operation, also had a good year of growth and expansion, selling strategic business services such as IP managed services, Ethernet and optical ring services at a rate of $1.5 billion in the quarter, up 8.4 percent over the prior year's fourth quarter.  Other key products included high-definition telepresence conferencing services, new unified communications offerings and enhancements to the voice-over-Internet protocol service catalog.  (See separate news release from Verizon Business: "Verizon Business Continues Strong Growth in Sales of Global Strategic Services.")

Verizon Communications Inc. (NYSE:VZ), headquartered in New York, is a leader in delivering broadband and other wireline and wireless communication innovations to mass market, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, serving more than 80 million customers nationwide.  Verizon's Wireline operations include Verizon Business, which delivers innovative and seamless business solutions to customers around the world, and Verizon Telecom, which brings customers the benefits of converged communications, information and entertainment services over the nation's most advanced fiber-optic network.  A Dow 30 company, Verizon employs a diverse workforce of nearly 224,000 and last year generated consolidated operating revenues of more than $97 billion.  For more information, visit www.verizon.com.

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