Verizon, DirecTV get closer -- for now
Even as Verizon Communications Inc. spends $6 billion on a new network capable of delivering cable television, the nation's biggest phone company is moving to offer a more tightly bundled telephone-television service package with DirecTV Inc.
Over the past month, Verizon has begun offering new customers a single bill that combines their satellite TV charges with their phone bill, more clearly identifying the $2 to $6 in monthly savings they can get. By June, Verizon hopes to begin sending a combined statement to tens of thousands of customers who had ordered DirecTV through Verizon before the one-bill option became available.
DirecTV, meanwhile, is looking into offering clips from its National Football League ''Sunday Ticket" package of 12 games every Sunday to Verizon Wireless customers using TV-capable cellphones on Verizon's new high-speed Broadband Access network, according to DirecTV executive vice president Steve Cox.
Verizon's tighter embrace of DirecTV comes, however, as the companies are theoretically headed toward becoming rivals in the pay-TV market. Verizon has begun building a super-high-capacity fiber-optic network, called FiOS, that it expects to begin using this year to deliver cable TV. Verizon will compete against cable companies including Comcast Corp. and RCN Corp. as well as DirecTV and EchoStar Communications Corp.'s Dish Network.
Verizon has identified 24 Boston suburbs where it is building out FiOS and expects the network to reach about 200,000 Bay State homes and businesses by the end of this year, although it may not immediately sell TV in every community.
On the ''enemy of my enemy is my friend" theory, phone companies like Verizon have been closely embracing satellite as cable companies ramp up phone offers. BellSouth Corp. also sells DirecTV service, while SBC Communications Inc. is linked with Dish.
''We felt that having the convenience of a single bill is really important to the customer -- the convenience and their seeing the discount," said Rick Yorra, a Verizon group manager who oversees service bundles. Verizon customers get $6 a month off DirecTV packages if they sign up for a local-long distance Freedom Package with either digital broadband subscriber line high-speed Internet access or dial-up access. Customers taking Freedom phone service get only $2 off.
Verizon has never released figures, but Yorra said that since its DirecTV partnership was launched last February, sales have climbed from ''several hundreds per day to several thousands every day" across the country. Verizon reaches about 30 million homes with landline service.
Josh Bernoff, a media industry analyst with Forrester Research in Cambridge, said the one-bill feature ''is significant. You'd be amazed at how difficult that is to do just because of how billing systems are." Comcast, for example, still sends subscribers separate bills for its own phone and Internet services.
How long Verizon and DirecTV will remain friendly, however, is unclear.
''Will there be times when we start to compete with each other? Sure, there will be," DirecTV's Cox said. But he predicted that ''for the near, medium, and probably longer term" they will be facing ''a common enemy and a common competitor, and that is cable."
Said Yorra: ''The way we see it, the FiOS deployment is going to take several years. I think the battleground is today. The cable company has their triple threat. We needed to develop a strategy to really fight back against the cable companies. Once you've lost the customer, they're really hard to get back."
Cox said Verizon Wireless ''would certainly be a very important potential partner" for NFL video, but because of DirecTV's partnership with BellSouth, it would also look to offer football clips to Cingular Wireless, which is owned 60-40 by SBC and BellSouth.
Bruce Leichtman, president and principal researcher at Leichtman Research Group in Durham, N.H., noted that Verizon has launched and dropped sales partnerships with DirecTV in the past. Verizon and its predecessors have been talking about doing TV since an early 1990s Bell Atlantic ''Information Superhighway" project that later collapsed.
Referring to Verizon and DirecTV, Leichtman said: ''We don't know if there are going to be tensions or not because there have been so many starts and stops. The question is: Is Verizon serious this time" about really deploying a TV-capable network and continuing to bundle DirecTV with phone and DSL service for the long haul?
The more serious issue, Bernoff said, could be customer confusion.
''For every community in which Verizon offers TV, there are going to be about eight where the only choice for them to offer is DirecTV," Bernoff said. ''In the long run, they will continue to deal with both, and it's very confusing to tell consumers: We can sell you FiOS TV if you're on the east side of town but we can only sell you DirecTV if you're on the west side of town, but if you wait a year, people on the west side can get Verizon TV, too."
Peter J. Howe can be reached at howe@globe.com.
