Verizon FIOS is a good deal, until you add it all up, then it's a confusing (bad?) deal
But what can you actually get for $69.99?
I often think of FIOS as the good guy in paid TV - mainly because consumers seem genuinely happy with the product. It's a little pricey, but the Internet speeds and channel choices seem to satisfy most people. More important, whenever FIOS arrives in a neighborhood, prices go down and service improves among competitive pay TV outlets. So that makes FIOS a bit heroic in the face of chronic "misbehavors" like Comcast.
Verizon, however, is squandering this goodwill with complex pricing schemes that would make any Gotcha Capitalist proud. Things are getting worse as competition from cord-cutters heats up. Verizon was an early adopter of the "Skinny TV" phenomenon, but as it tries to shove its nominal price points lower, it's creating confusion for consumers that's unnecessary and unfair. Verizon's new $55-a-month packages, which cost closer to $100 a month, are an example.
I often rile against firms that advertise prices which are impossible to pay. You know the drill -- "Flowers for $29.99," when the lowest possible price some can pay to buy flowers is $52.15. Such hidden fee, tack-on pricing models are misleading and I believe they should be illegal. They're not; everyone does it. Verizon could make the case that since everyone does this, the firm *has* to, and I am sympathetic to that argument. Really, I am. In my book, Gotcha Capitalism, I tell the story of firms that attempted "all-in" or "up front" pricing and had to abandon the practice because consumers nearly always fall for the teaser prices that companies concoct.
Still, Verizon's new pricing scheme seems over-and-above the usual price tag chicanery I see. Consumer Reports' James K. Willcox did the math recently on a $65-a-month plan that included Internet access, so I'll let him try to explain. (.)
You might be in for a shock when your first bill arrives. Based on the fine print, Verizon charges up to $150 as a "set-up" fee, $12 per month for an HD settop box, and $10 per month for a router fee. There's also a $5.85 regional sports network fee, a $2.99 per month broadcast fee, and $.95 a month fee for something called an "FDV Admin," which is apparently a Verizon-imposed surcharge for voice service.
If you divide the $150 set-up fee over 12 months and add in the other charges, you'll be paying $44 a month on top of the stated cost of the plan. Suddenly, that $65 deal has ballooned to nearly $100. Try not to have any misgivings, though. If you decide to cancel your service after the second month, Verizon can charge up to $230, depending on the plan, as an early-termination fee.
Ugh.
I've asked Verizon if it would like to comment about the Consumer Reports story; (EDIT 6 p.m. ET) and you can see the respond below.
The thing that always makes me hesitate about FIOS is the proprietary box consumers need to rent; most cable services still let consumers buy their own (much cheaper) boxes, and that's good. Even better, the FCC just cleared the door for more competition in the set-top box world, which is something to look forward to.
FIOS can still be a good deal for you, and I'd encourage you to frequently compared what you are getting with what FIOS might offer. But when you do, bring a calculator, because you might try to leave a triple-digit cable bill and find yourself with a very similar FIOS bill after all the Gotchas are said and done.
UPDATE: Here's what Verizon sent to me as a response:
The pricing confusion referenced in the original Consumer Reports story was partially based on inaccurate information on one of our vendors’ websites that has since been corrected.
Our Custom TV packages were designed to give customers who didn’t want our full channel line-up packages the ability to select “skinnier” packages that more closely suit their and their families’ viewing habits
The Custom TV packages were never designed to be for everybody, only those customers that felt they matched their viewing habits better
While we’re striving to simplify our plans for our customers, we also want to provide them with choices – choices that best reflect their personal TV viewing habits – that’s why we have multiple offers available. We’re trying to strike a balance between the two.
As for the other equipment fees, taxes and surcharges, those are standard across the industry and we spell them out for our customers when they initiate service with us and on their monthly bills.
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