It's a stupid idea to do a truck roll to resolve upstream peering/transit/congestion issues with the IP network. The technician's job is to diagnose OSI layer 1/2 issues to your local DSLAM or CMTS.
With Time Warner, there is an absolutely impenetrable firewall between customer service and backend/upstream network engineering. Rolling a truck appears to be the absolute ceiling on what a call center employee can do.
This is unfortunate, but I can sort of understand why. Customers are frequently mistaken on what's wrong with their connection, example, the customer thinks they're seeing 0.5% packet loss and high jitter consistently to something that's 3 hops upstream of their default gateway, when in fact there's something messed up in their home Wifi which is on channel 1 the same as their four neighbors.
It takes a lot of time (time = money) to train first tier customer service reps how to recognize what needs to be escalated to the people who have 'enable' on the network equipment 2 to 4 hops upstream of a typical cablemodem/DSL customer. And then the management decision to empower them to do so if necessary. And a method for the NOC of filtering through the crap to discover that "Yes, this customer really has discovered some service impacting issue that has not been automatically reported by our NMS".
Usually because a customer can't properly articulate on the phone what's wrong with their connection. Last mile broadband providers want to do as much as possible to avoid a site visit to a home. Unless they're charging $95 per visit one technician visit for 30 minutes can eat up all the profit from that customer for an entire year.
How much does your ISP charge you? Verizon managed to get $71.48 a month out of me on a connection that had been set up by a technician nearly 10 years prior before I got fed up. A technician visit at that rate would probably eat just 1 month of profit on a connection whose initial installation cost had been paid many times over. The reason that I got fed up was that they kept trying to get more. Nearly all of those years had involved a triple play, for which they had raised rates until they charged ~$162 a month.
Sadly, I was not the one who negotiated with them. Had I been, I would have been fed up well before things became that bad. The $71.48 came after breaking the bundle I favor of an OTA antenna and VoIP. I managed to talk my way out of the ETF by telling a supervisor that the ETF was the same whether I cancelled all services or just 2 and that I was giving Verizon the chance to keep some business, provided that they reduced services to just the Internet connection and waived the ETF. The supervisor waived it.
After breaking the bundle, I took over responsibility for such bills. I am paying Cablevision ~$45 a month now. Bandwidth is lower, but I reason that as long as bandwidth is high enough to deliver traffic with acceptable latencies, being able to burst higher does not matter that much. So far, things have been okay on both pricing and having a usable connection, despite a few initial goofs by Cablevision.
How much profit do you think Verizon actually makes from your $70/month connection?
FiOS revenues make up 70% of Verizon wireline's revenue, and the average monthly bill is like $110. But the division's profit margin is 2-5% most years. Let's say generously they're making $7 a month on you (10%). A Verizon tech makes $35/hour+ not including benefits. So a one-hour field call wipes out 5 months of profit.
They make nothing off it because I cancelled service.
Google searches show that they have had a special $29.99 reactivation rate for years. Several months ago they made it $39.99 in the second year. A couple years prior, they had also added a $1.99 municipal construction fee. That works out to be $37 a month. I assume that the amortized cost of keeping the fiber lit is below that because I doubt that they would make such an offer at a loss.
Charging a long time customer higher pricing would provide them with money that they can spend on things like Fios network expansion and network upgrades, which are expensive.
Your analysis is wrong. When Verizon spends a bunch of money to wire up a neighborhood, that doesn't come out of profits. Instead, it books a capital asset that is depreciated over time. Verizon wireline's EBITDA margin these days--five or six years after the end of significant network expansion--is about 22%. That's what's left after paying for ongoing maintenance, support, and bandwidth, but before accounting for recouping the cost of the original build. After accounting for depreciation, interest, and taxes, it's under 5%. That means the up-front cost of your connection is being recouped at $10-20 per month at most.
Verizon spent about $20 billion on FiOS, and has about 7-8 million customers. So the average customer cost about $2,500 to wire-up. That means it'll take 10-15 years to recoup the initial cost of the build-out.
The special-offer pricing is not meaningful. Most of the cost of building and maintaining fiber is getting to the neighborhood. FIOS penetration is only about 1/3 in the places where service is offered. Which means that Verizon has a lot of incentive to make offers to those 2/3 at a rate below what it could sustain charging everyone.
Again, even though the average FIOS subscriber pays $100+ per month (triple play, etc), the division's net profit margin is under 5%. It would be losing enormous amounts of money if people were paying $30-40/month.
Your analysis is wrong because the subscriber count excludes Fios subscribers in areas that they sold to Frontier while the $20 billion includes them. The costs also vary depending on subscriber density. Furthermore, the actual installation cost is $750 in my state according to Verizon:
I recall that number was ~$1000 9 years ago. I find it hard to believe that Verizon did not recoup that over 9 years. That is less than $10 a month over that time frame. My household paid $10 to $20 a month more for higher speed tiers over that 9 years. Those cost Verizon almost nothing so it is reasonable to conclude that they recouped the initial installation cost in this instance.
Also, Verizon has two tiers of special rates. One for new sign ups at locations that have already been wired and one for new sign ups at locations that have not. Mine is one that has been wired. Entering into an arrangement where the income from providing service is less than the day to day expenses of providing it before including one time installation costs even with a contract period makes no sense, so I do not think that Verizon is doing that. Since the one time installation costs are paid, they would have been making money even at the lower rate in my case under that assumption. Obviously, it would not be as much, but I am okay with that.
I realize that individuals' calculations often underestimate ISP expenses. However, my case is one where such calculations should apply. I also realize that wireline margins are low in general. I did not mean to state that the profitability of my particular Fios connection was the norm. I only meant to say that there are instances of old lines where the margins far exceed the average. That is why I said the connection was setup "nearly 10 years prior". The profitability of the connection would have been a very different matter otherwise.
I took another look at this. The $750 per house figure was actually for wiring the neighborhood without going into any homes, which costs an additional $600:
>In New York, Verizon said it costs about $750 per house to bring FiOS service to a neighborhood, plus an additional $600 to run the fiber into the home of a consumer who wants to purchase FiOS service.
Assuming 40% penetration (also in the article) and $600 on top, the cost is $2250, which is close to your $2500 calculation. I still think Verizon made that up over the course of 9 years. I just need to include the set top box rentals in the calculation. Assuming that my household paid $15 on average over 9 years more than the base tier price on average for the internet connection and each of the 3x $5 a month set top boxes that we had for 8 years cost Verizon $250 each, I get $2310. This is before considering that those should still be worth something and the principle that Verizon would not offer lower rates than their operating costs. That would be a great way to obtain negative margins.
sadly, I am... I work for an ISP that generally doesn't make these mistakes, our network engineering/operations/construction team enjoys observing all the stupid things Centurylink and Comcast do in our local market.
