Verizon Store Follows Apple's Example
Telecom Firm Aims to Lure Cable Customers to TV Service

By Kim Hart
Washington Post Staff Writer
Thursday, December 28, 2006

The battle between cable and telephone operators to snag customers in one of the most competitive markets in the country is playing out in a Fairfax mall, where shoppers lounged in front of high-definition televisions, surfed the Web and fiddled with the latest cellphone yesterday.

Here, at its new store in Fair Oaks Mall, Verizon Communications is attempting to market speed -- by demonstrating the features customers can expect from its new super-high-capacity fiber-optic network.

Verizon is spending $18 billion to turn its existing copper lines into a much faster fiber-optic network, named Fios, allowing Verizon to add video and other services in an attempt to leapfrog cable companies in the race for all-in-one communications bundles.

The company's new store, Verizon Experience, is an attempt to stand out from traditional phone stores. Instead of a few sales assistants at a counter as shoppers wait impatiently in lines, nearly 20 sales people roam the floor and help customers at different stations.

Half a dozen big-screen TVs show high-definition movies. A row of laptops display video games for customers to play. Specialists at the Guru Zone help people customize their purchases and set up e-mail accounts. And there are cellphones, too. At the Demo Bar, customers experiment with the newest models.

"Verizon's taking dead aim at the cable operators who have spent tens of billions of dollars to get their networks in place," said Kurt Scherf, vice president and principal analyst at Parks Associates, a Dallas market research firm. Telephone companies have an advantage over cable companies because they also offer wireless services, he said.

Verizon opened the store -- its second in the nation -- in Fair Oaks Mall on Dec. 15 to market its television, phone and Internet service as well as its wireless plans.

The Washington area has emerged as one of the most competitive telecommunications markets in the country as cable and phone companies vie for customers. Local cable companies, however, say they aren't threatened by Verizon's expanded presence.

"We see them as the company trying to catch up to us," said Alex Horwitz, a spokesman for Cox Communications, which serves about 225,000 cable customers in Fairfax County and opened a sales kiosk in Fair Oaks Mall in August.

Cox spent $650 million to upgrade its cable network in 2000 and added digital voice services in 2004. "We've been offering all three services for two years now."

Verizon does not disclose its number of local customers, but Fios is available in Arlington, Loudoun, Fairfax and Prince William counties in Virginia, as well as in Montgomery and Prince George's counties in Maryland. The network is not yet available in the District.

Verizon rolled out its Fios TV service in November 2005, and Herndon was one of the first areas to have access to the new fiber-optic network. According to its latest financial statements, 5.3 million homes have access to the network, and Verizon expects to reach its target of 6 million homes by the end of the year. The company said it has 118,000 Fios TV subscribers and that its customer base has increased by 80 percent over the past six months.

The Fios network is an expensive undertaking for the company, which spends nearly $900 to extend the network to a home and another $900 to connect it to the service. Wall Street has balked at the high cost of the project, and some analysts have questioned whether customers will switch to the services as Verizon sheds its landline business.

The other Verizon Experience store is located near Dallas in Southlake, Tex. Both stores are located in Verizon's most-developed Fios markets. Verizon Wireless operates about 2,000 retail locations, including stand-alone stores, kiosks and counters in Circuit City stores. Best Buy also distributes its wireless phones.

But upscale stores, much like those opened by Apple Computer, are rare in the cable and satellite-TV industries -- which company officials hope will help set Verizon apart from its cable competitors.

"It's our foray into the one-stop shop for customers where they can test-drive the services," said Andrew Vardaro, manager of the Fairfax store. "It's about bringing the experience to the customer and getting them involved."

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