Verizon Strikes Up the Broadband Subscribers

Verizon (VZ Quote - Cramer on VZ - Stock Picks) came come out swinging in the broadband wars last quarter.

Industry watchers say Verizon's recent $15-a-month DSL offer helped convince more than 600,000 people to hang up their dial-up connections in favor of faster Net access in the fourth quarter.

If the early numbers are true, Verizon will have far surpassed Wall Street expectations of more than 300,000 new users. The company posted broadband subscriber growth of 389,000 users the previous quarter. And depending on how well AT&T (T Quote - Cramer on T - Stock Picks) did in the fourth quarter, Verizon may have edged out the former SBC for the top spot in broadband growth, even outpacing cable giants like Comcast (CMCSA Quote - Cramer on CMCSA - Stock Picks) and Time Warner (TWX Quote - Cramer on TWX - Stock Picks).

The sudden spark on the broadband side is a welcome sign for Verizon watchers who have been worried that the phone giant was squandering billions of dollars on a dicey consumer service gamble.

To date, DSL -- the shorthand term for the digital subscriber line Internet service big telcos are using -- has largely been in the background at Verizon, with most attention focused on the company's multibillion-dollar fiber optic expansion effort. The so-called Fios plan calls for superfast data lines to be strung to homes to deliver triple play services like TV, Net access and calling.

Based on analysts' cost projections, Verizon has spent $3.2 billion on Fios over the past two years. Analysts estimate that Verizon had about 100,000 Fios subscribers at of the end of September.

"They have long been the laggards in broadband," says a Wall Street analyst with a neutral rating on the stock. "If they are trying to justify what they are spending on broadband, then it is important that they deliver at or better numbers than their peers."

Along those lines, Verizon said Thursday that it has followed the lead of its Bell brethren BellSouth (BLS Quote - Cramer on BLS - Stock Picks) and AT&T by partnering with Yahoo! (YHOO Quote - Cramer on YHOO - Stock Picks) to provide broadband users a few free perks like radio and bigger email capacity.

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