• by David Goetzl  @dgoetzl, October 31, 2006

Verizon CFO Doreen Toben said Monday the company is making "steady progress" with the rollout of its FiOS TV service. The "telco TV" offering is now in 118,000 homes--10% penetration within its footprint of 1.2 million homes. "Customer acceptance in video is ahead of plans," she said.

However, on the third-quarter earnings call, Toben said Verizon plans to be in 175,000 homes by the end of the year--the same projections it has offered before.

She said churn is under 1.5% per month, showing consumers are happy with the service--while new features are coming soon.

Advertisers are watching the progress of telco TV carefully to gauge whether it becomes a viable competitor to cable, providing a new outlet for local spots. AT&T's U-verse is also in the market. With Verizon and AT&T eager to ramp up, they could offer lower ad rates as a way to compete with cable's local sales efforts.

Verizon added 63,000 FiOS TV homes in the third quarter, compared to 35,000 last quarter. The service is available in parts of seven states, and the company has been making an effort to grow adoption in the New York DMA, via TV spots in the pricey market.

The company has considerably wider distribution than AT&T, which is in a mere 3,000 homes in San Antonio--although the U-verse service also has a 10% penetration rate out of a 30,000-home footprint.

AT&T says it plans on a growth spurt over the next two months--with service in Houston rolling out next month, leading to a total of 15 markets by the end of the year. All customers will have the option of HD service.

Telecom companies want to offer TV service to compete with cable companies that have successfully moved into their turf with triple play offerings that include phone service. The telecoms, however, could potentially offer a quadruple play, with TV, phone, wireless and Internet service.

FiOS is a modest--but closely watched--part of Verizon, which saw third-quarter revenues rise 25.8% to $23.3 billion over the same period a year ago.