Thursday, May 14, 2009

Verizon Selling Some Phone Markets

Verizon took a bold move this week, selling 4.8 million phone lines in 14 states to Frontier Communications. It gives Verizon a piece of Frontier's business, but more importantly, indicates that Verizon is concentrating instead on larger communities where it can replace copper lines for fiber and offer their FIOS product. Small, rural markets are best served by others. In addition, it allows more focus on wireless, especially as consumers shun their hard wired phone for cellular. "The local phone business, in fact, has been contracting quickly as customers shift to phone service offered by cable companies or simply to using their cellphones. Verizon, which will have 30.3 million phone lines left after the deal, lost 10.2 percent of its lines last year in the regions it is selling."

As capital is tighter than ever, and cost management means doing more with less, Verizon is better served concentrating on FIOS and wireless businesses where larger growth is more likely. Consumers are demanding a broadband connection and the costs to rebuild these smaller markets is high. The future for Verizon is their FIOS and cellular operations providing consumers and businesses multiple products: cable, broadband, IP phone, and cellular.

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