Must-know: Analyzing Verizon’s plans to improve customer service

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Sep. 1 2014, Updated 8:00 a.m. ET

Verizon’s FiOS penetration has increased

Verizon (VZ) has consistently managed to gain both FiOS Internet and video subscribers, so its penetration levels have gone up. As the chart below shows, Verizon’s FiOS Internet penetration increased from 38.6% in 2Q13 to 40.1% in 2Q14. Meanwhile, its Video penetration has gone up from 34.5% to 35.3% during the same period.

Despite all this, Verizon’s customer service levels seem to have declined in the last few months. This shows that it could soon start losing subscribers if it doesn’t act fast to improve its service.

Customer satisfaction levels for Verizon’s FiOS service have fallen

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Netflix (NFLX) has blamed Internet service providers—including Verizon, Comcast (CMCSA), AT&T (T), and Time Warner Cable (TWC)—for deteriorating Internet speeds, especially during peak hours. Netflix claims this affects its video programming quality, subjecting customers to long wait times and high buffering rates. According to another study by Netflix, Verizon’s FiOS internet service ranks a distant 12th, while its DSL Internet service places at the bottom, 16th position, in terms of average speed in Mbps among U.S. Internet service providers.

Customer satisfaction for Verizon’s video service also seems to have gone down. According to a study by the American Customer Satisfaction Index, customers are least satisfied with Verizon’s FiOS video service.

How Verizon plans to improve its customer service

But Verizon is hoping to improve its customer service levels through the introduction of FiOS Quantum broadband and FiOS Quantum TV. Quantum broadband provide customers with high Internet speeds, ranging from 50 Mbps to 500 Mbps, while Quantum TV has some attractive features—like better video recording, pause and rewind capabilities, and additional storage space for its customers.

Verizon is also looking to improve its service levels by acquiring more video content rights for users to stream them on their smartphones and tablets.

To improve this service further, Verizon plans to launch LTE multicast technology by next year. This technology would cater to the need for live events to be broadcasted to a number of users at the same time. This technology would transmit video without consuming a lot of bandwidth and spectrum, further benefiting customers.

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