As Fios comes to Boston, Comcast holds its fire
Verizon Communications Inc.’s rollout of its Fios service in Boston so far hasn’t triggered a price war among cable and Internet service providers.
But rival Comcast Corp. is responding on another front, boosting Internet speeds for its Boston customers, adding more Wi-Fi hot spots around the city for mobile connections, and padding its viewing options. RCN Corp. plans to upgrade its Internet services in early 2017 in Boston.
Fios is one of several new entrants that are providing a jolt of competition for Boston consumers.
Within a few months Starry Inc. is scheduled to roll out its high-speed Internet service that uses extremely high-frequency radio signals to Boston and surrounding communities. It joins another local wireless provider, NetBlazr, which serves businesses and apartment buildings. Alphabet Inc., parent company of Google, recently acquired wireless Internet provider Webpass, which serves Boston-area businesses and apartments.
Jascha Franklin-Hodge, the city of Boston’s chief information officer, said that with so many Internet and cable options coming together in 2017, “we feel like the conditions are right for competition to be a real thing in Boston for the first time.”
Verizon’s Fios buildout is the biggest of the new additions. Comcast, RCN, and Verizon have long competed against each other in a number of suburban communities. But for most Boston residents, Comcast has been the only game in town for combined cable and high-speed Internet. RCN says its service is accessible in only about 30 percent of the city, while Verizon refused for years to wire Boston, citing the high cost of installing a new fiber network.
Then under a deal reached with Mayor Martin Walsh in April, Verizon said it would spend $300 million over six years to bring Fios to city neighborhoods. The first homes to tap into the service, mostly in Dorchester, Roslindale, and West Roxbury, went live in December, and Verizon said about 25,000 have access to FIOS.
Verizon is trying to woo customers with an introductory plan for a two-year contract that includes voice telephone service, over 160 television channels, and 150-megabit-per-second Internet service for $79.99 a month in the first year, and $84.99 in year two.
“I think that offer is going to be very pleasant to a lot of customers, compared to what they see on the bottom of the bill from Comcast,” said Robert Mudge, Verizon’s executive vice president for strategic initiatives. He said that “hundreds” of Bostonians have signed up.
By contrast, Comcast offers phone, about 140 channels, and 100-megabit Internet service for $89.99 a month, rising to $114.99 a month in year two.
An early convert is Palmer Woodbury, a home improvement contractor in Dorchester, who switched from Comcast, where he was paying about $350 a month to connect his family’s five TV sets.
“I’m extremely frustrated with Comcast and I think a lot of people are,” he said. “Their prices are extraordinary.”
Woodbury’s new monthly bill for Fios is $192, and he said his Internet speed is also much improved.
Comcast spokesman Marc Goodman declined to respond to Woodbury’s criticisms, and also to say if the company will respond to Verizon’s cut-rate deal with price cuts of its own. But Goodman said Comcast has competed successfully against Verizon in other markets and expects to do so in Boston.
In the past two months, Goodman said, Comcast has boosted Internet speeds — to 200 megabits per second for those customers who signed up for 150-megabit-per-second service — at no additional cost. Netflix was added as a viewing option directly on Comcast’s menu and the company has expanded its network of Wi-Fi hot spots in public places. Any Comcast subscriber can use a phone or laptop to get high-speed Internet access from these hot spots without paying an additional charge.
“This is the type of innovation our customers have come to expect, and that we will continue to deliver throughout the City of Boston and beyond,” said Goodman.
RCN, which has 90,000 customers in the Greater Boston area, said it is used to competing against Verizon.
“We’re more than holding our own,” said general manager Jeff Carlson. “We’re actually growing customers pretty much throughout the footprint.”
RCN currently offers a no-contract plan that includes phone service, 270 TV channels, and 155 megabits of Internet for $89.99 a month.
It’s unclear if the additional competition would lead to significantly lower prices. A 2015 survey from the Federal Communications Commission found that traditional cable companies charged only about 1 percent below the national average when faced with a competing cable and Internet company. The rivals, meanwhile, charged more than 5 percent above the national average.
James McQuivey, a telecom analyst at Forrester Research in Cambridge, predicted Verizon’s move into Boston will force Comcast to deliver better service.
“It changes the ability of the monopoly player to disregard customer service problems,” said McQuivey. “It’s not that they’re going to suddenly become saints and people will love them. But at least they’ll have to address the most egregious complaints.”
Franklin-Hodge said the city has no say about the prices and services offered by cable and broadband providers.
“But what we do expect over time is that a competitive market will produce a good range of options for consumers,” said Franklin-Hodge.
Correction: An earlier version of this story was missing the first name and title of Robert Mudge, Verizon’s executive vice president for strategic initiatives