Verizon's Higgins discusses LTE module pricing, M2M innovations and working with OTT players

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 Brian Higgins

with Brian Higgins, vice president, network and technology at Verizon Wireless

A little more than a year after opening the doors at its LTE Innovation Center in Waltham, Mass., Verizon Wireless (NYSE:VZ) now boasts that more than 20 products – from routers to modules and more – were developed at the center and dozens more are currently in development. FierceWireless Editor in Chief Sue Marek recently talked with Brian Higgins, Verizon Wireless' vice president of network and technology, about the LTE innovation center and types of solutions that his teams are working on there.  Higgins also addressed other burning issues in the wireless market, such as LTE module pricing and Verizon's philosophy on working with over-the-top providers.

FierceWireless:  Now that Verizon has extensively deployed its LTE network, the company appears to be very focused on driving applications that take advantage of the LTE network speeds and capacity. Why is this important?

Higgins:  It's all the things – the throughput, the capacity – in the LTE network that are opening up new areas. A lot of what we are doing is still the stuff you've heard about before: routers, point of sale equipment, backup connectivity for your office, primary connectivity for satellite offices. Those things continue to occur. But the nice thing about LTE is people are recognizing the capabilities of the network and then seeing the additional applications that they can put on top of existing solutions like point of sale.  Or they are looking at what other things they can do that eliminates some of the barriers that they have had  with more traditional wired connectivity.

FierceWireless:  Is healthcare still a big focus in Verizon's Innovation Centers?

Higgins:  Heathcare is still a key area for us. Things like the connected ambulance, connected emergency rooms,  telehealth and health kiosks are still permeating for us. The good news is that once you make inroads in an area like healthcare, people start to realize the flexibility that you have and it can grow from there.

FierceWireless:  What about the utilities and smart grid?

Higgins: The same is true with the utility space. Smart meters are big but so is utility monitoring and distribution and all these elements in the utility space where we can apply sensor technology to make sure they are being more efficient and can respond more quickly to any type of outages that are there.

FierceWireless: What other areas are growing?

Higgins: I think shopping is interesting. The old vending machines that we have had around for a long time are becoming connected.  You can integrate things like Isis [the forthcoming mobile commerce venture between Verizon,  AT&T Mobility NYSE:T) and T-Mobile USA] then you have the ability to pay for things in real time. I have a machine that knows who I am and can offer promotions right there in the machine. It makes me more efficient as a vendor and allows me to be more creative with the things I can offer whether it is through digital signage on the machine or a mobile coupon. 

Broadcast video is another area that is growing. We can eliminate microwave trucks and put high-end digital video cameras in people's hands. That's an interesting area and more companies are coming on board with that.

When we think about what LTE can do, it's really more about what LTE can't do. There are a lot of different companies coming to us through the Innovation Centers with a lot of creative ideas.  We are spending a lot of our time figuring out how we can get LTE embedded into the solution. And then we work on the go-to-market strategy. How do we get in there and unlock some opportunities.

FierceWireless:  These scenarios all sound great but one of the underlying issues that I've heard about is the price of the LTE module. Don't we need to see LTE module prices go down before we will see this type of widespread deployment?

Higgins: It's a classic curve on the manufacturing side where you have to drive the volume to get the price to come down. Certainly LTE today is more expensive than older 2G technologies. But what we are seeing, for example, in the utility space, is that even if the module costs a little bit more than what I see on 2G side, I want to make sure I'm putting a module in there that I'm not going to have to change in the next 10 to 15 years. That means I want to put the most advanced capability in there. That applies to the  vending machines as well.  

This discussion is one that we had more of a few years ago than today. Now it's more about how do we get these types of solutions into these products.

FierceWireless: But  there is a big difference between 2G module pricing and LTE module pricing.  Are LTE modules a better fit for more expensive types of solutions? 

Higgins: I see what you are saying and it does matter.  If you are looking at a broadcast TV camera, and the cost is going to be several thousand dollars, then there is likely to be less of a concern about the price of an LTE module.

Even for some items where cost is a factor – like utilities—they want to make sure the cost of the meter is as low as possible. But then they also look at other things like if I have to do a truck roll in 10 years or 15 years, they use that to balance out the decision. Because truck rolls are expensive. The other things they think about as well is the future capabilities that they may want to put into these devices. Even if today, they might not need the throughput and additional capability of LTE, there may be a time down the road when they will want to leverage that capability. They have to look at the overall cost to support the product now and the future capabilities that are possible and they think will be meaningful.

FierceWireless:  On the consumer device side, we have seen a lot of products with LTE connectivity—but  not necessarily Verizon's LTE connectivity.   Devices like the Amazon Kindle Fire HD and Sony PlayStation Vita have had AT&T's LTE connectivity.  Are you competitively going after those types of devices?

Higgins:  We do go after those types of devices. There are teams within the company that work on those devices. It's a matter on picking the areas that make the most sense.  I can't comment on those deals directly.  I don't focus on those individual deals. But we do compete with the other carriers.

FierceWireless:  One area that seems to be getting a lot of attention is connected car.  Are you hearing from car-makers that want to embed LTE in their automobiles?  Do you see LTE being a big part of the connected car?

Higgins:  I do. Even though you aren't seeing a tremendous amount of activity right now, I can tell you that the conversations we are having with the OEMs are really focused on what they can do with LTE.  If you are thinking about cars in the not-too-distant future, they be embedded with LTE so they can unlock all the things we've been talking about whether it's infotainment, or security or any other capabilities the automobile manufacturers are envisioning.

FierceWireless:  Is roaming an issue in these discussions?   I know that car-makers have said that they don't want to have to deal with different technologies that may be in different parts of the world. They ship their cars all over the world and they want them to be able to use the same technologies and have the same capabilities.

Higgins:  I think anyone that is building global devices or solutions, like automobiles, want to build something with a global standard.  That's part of the reason LTE is so important right now.  Everyone recognizes that is where everything is going.  But you have to factor in the [spectrum] bands as well.  The discussions aren't just about the technology, because we know it's going to be LTE, but also let's think about the bands. These are active discussions that we are having with the automakers and all the global device makers.  What's the right combination?  It's going to LTE but what are the frequencies?  And we have to make sure that those are included.

FierceWireless:  You've been on panels talking about over the top players.  Similar to M2M, the OTT players have a different business model.  How does Verizon look at OTT players and how will the company work with them?

Higgins:  I think you end up with a lot of different permutations with M2M.  You will have instances where Verizon or another player will simply provide connectivity. And then you look at the other services that you will layer on top. That's why we made purchases such as NPhase or Hughes, as well. Those are broad-based intelligent services that let you better manage these solutions. They provide the provisioning, the authenticating of the services, etc.  Those are the kinds of things that we are providing that may not be used by some of the customers. Some may want to build their own capability. Others may want to work with us.

FierceWireless:  But will you also develop your own services that may even compete with some of the OTT players that you are also partnering with?  You have a video service that you have packaged and branded that could also compete with OTT players' content.

Higgins: You mean, like Viewdini  [Verizon's video portal]?  You are always going to have co-opetition that is ongoing. We are going to work hard to enable the over-the-top players that are there, whether M2M or other straight-up applications. And at the same time we are going to make sure we are competing.  We want to make sure we are building the best product available. For M2M hopefully there will be instances where they look to Verizon to provide the end-to-end solution. Can you make it embedded in our devices?  Can you collect the analytics?  Can you store it all in the cloud for me?  Those are all capabilities where we are making investments.