Verizon’s wireline revenues
Verizon (VZ) reported wireline segment revenues of $7.4 billion in the third quarter. Excluding the revenue recognition impact, Verizon’s wireline revenues declined 3.7% YoY in the quarter. Loss of FiOS video customers led to a decline in the company’s wireline segment revenues. FiOS is a fiber-optic network service that provides Internet, video, and voice services to its users.
Declining FiOS video customers
While the company witnessed an addition of 54,000 FiOS Internet customers owing to strong demand for high-quality Internet connection, the wireless service provider continued to struggle with declining FiOS video customers. Verizon lost 261,000 FiOS voice connections in the third quarter of 2018.
The company has lost FiOS video connections for the past seven consecutive quarters with 63,000 customers lost in the third quarter, as viewers continue to prefer cheaper TV services over the Internet instead of more expensive cable packages. As of September 30, Verizon had ~4.497 million FiOS video connections, a little less than the 4.560 million connections it had in the second quarter and 4.648 million in the year-ago quarter.
A large number of consumers have been shifting from traditional cable subscribers to over-the-top offerings, which is known as “cutting the cord.” The trend has dented the subscriber base of pay-TV companies including AT&T (T) and Comcast. Popular streaming service providers including Netflix (NFLX), YouTube TV of Alphabet (GOOGL), Hulu Live TV, and Amazon’s (AMZN) Prime offer movies and TV shows directly to customers over the Internet at a cheaper rate than a cable or satellite connection.
Consumers’ growing interest in watching online videos has therefore forced TV distributors and programmers to launch online TV offerings. Dish Network and AT&T have started focusing on their respective streaming offerings Sling TV and DIRECTV NOW to attract subscribers. The acquisition of Time Warner has also given AT&T control over Turner Broadcasting, which owns CNN.