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VZ's FiOS 500MB Beats CMCSA

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Leading U.S. carrier, Verizon Communications Inc. (VZ - Free Report) has launched Quantum fiber-optic service, an Internet service through its FiOS cable network. The new service outpaced the Internet speed of MSO Comcast Corp. (CMCSA - Free Report) .

The telecom giant is offering speeds up to 500 MB per second, just behind Google Inc.’s 1 GB speed but well ahead of Comcast’s 305 MB downloading speed.

Since yesterday, the Quantum fiber-optic service is available across all FiOS markets at a price of $309.99 for a double-play service of Internet, TV or telephone. In case of a triple-play service (inclusive of video, Internet and voice), the subscriber has to pay $329.99. However, Comcast’s Internet service is slightly cheaper than the Quantum fiber-optic service, costing $299.95 per month.

Similarly, Google Fiber service starts at $70 a month. The service is already available in Kansas City, Missouri and is expected to be launched in Austin, Texas, and Provo, Utah, by the end of 2013.

Recently, Verizon reported second-quarter 2013 financial results where its bottom line was in line with the Zacks Consensus Estimate but the top line missed the same. During the quarter, Verizon added 140,000 and 161,000 customers to its FiOS Video and FiOS Internet services, respectively.

Verizon exited the quarter with 5.0 million (up 12.6% year over year) FiOS Video customers and 5.8 million (up 12.2%) FiOS Internet subscribers. The penetration rate (subscribers as a percentage of potential subscribers) of both FiOS Internet and FiOS Video increased to approximately 34.5% and 38.6%, across all markets from the year-ago levels of 32.6% and 36.6%, respectively.

Hence, we believe that the launch of the new service will not only drive Verizon’s FiOS business but will also help the company to consolidate its position in the U.S. telecom market against leading players like AT&T, Inc. (T - Free Report) , Sprint and T-Mobile US.

Currently, Verizon has a Zacks Rank #3 (Hold).

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