FIOS Going UP…. As in Like the Price Dude!

Business Week. The price of FIOS is going up. Those folks that signed up for FIOS at $39.95 will be billed at $42.99 beginning in 2008. My cut says there might be some contract squabbling by some. Date based price jumps conflict with contracted lede in loss seller pricing. We shall see.

Interesting observation –

“Verizon’s price increase suggests that the risk of a price war in the Pay TV market is likely lower than investors expect,” said Craig Moffett, an analyst at Sanford Bernstein who first wrote about the price increase, in a note. “High variable costs — not sunk-cost economics — appear to be driving pricing decisions.”

Rabe said FiOS TV service will offer more content next year, and that it remains competitively priced with its cable rivals.

Moffett noted that Verizon is spending a lot of money on advertising and promotional incentives to attract customers. He said he believes the high costs make the $18 billion investment in FiOS unattractive.

Other analysts, however, have noted that the large investment is necessary if Verizon is to keep pace with cable companies, which pilfered telephone customers with their own Web-based phone service.

Keep in mind folks, FIOS is just the TV portion of the package. Verizon really wants you to buy the whole bundle — FIOS, FTTP, VoIP. The difference between 20mo vs 48mo payback for Verizon hangs in the balance. But to be fair, Verizon stuck their neck out on FTTH. They deserve kudos for taking the gamble.