Verizon Wireless (NYSE: VZ) is not that worried that cable MSOs will start eating into the wireless business with Wi-Fi-first business models, according to a senior Verizon executive. At an investor conference today, Verizon Communications CFO Fran Shammo touched on several hot-button issues for Verizon and the wider industry, including new FCC regulations on net neutrality and data roaming.
Shammo also said he expects Verizon's wireless churn figure to be higher in the first quarter than in the year-ago period amid continued competitive pressure, but said he did not see it as a long-term concern.
Shammo, speaking at the Deutsche Bank Media, Internet & Telecom Conference, noted that when Verizon bought AWS-1 spectrum from a group of cable companies in 2012, Verizon agreed to allow companies like Comcast (NASDAQ: CMCSA) to launch MVNO services on Verizon's wireless network--and he said Comcast remains free to do so.
"Cable companies will probably execute on some type of an MVNO for Wi-Fi, but we don't believe it will be a replacement for LTE," he said.
Further, Cablevision's (NYSE: CVC) recent decision to launch its Freewheel Wi-Fi calling and data service seemed to leave Shammo unperturbed, as the executive noted that he thinks Wi-Fi will not be a replacement for LTE and that Wi-Fi has always been a complement to LTE networks. Cablevision has indicated it will soon start selling a Freewheel app that will enable iPhone and a wider range of Android users to access the Freewheel Wi-Fi service.
Separately, Shammo said Verizon sees great opportunity in LTE-Unlicensed technology and having a managed network in unlicensed spectrum.
Shammo was also asked about the FCC's decision to reclassify broadband as a telecommunications service under Title II of the Telecommunications Act as part of its effort to enact net neutrality regulations for wireless and wired networks. Shammo said Verizon still has not seen the full rules, but added, "I would have to assume that there is going to be a lot of litigation around this" and that "unfortunately" taxpayers are going to pay the cost of defending the rules in court. He said that under the rules, which he said are unnecessary since ISPs have not engaged in practices like paid prioritization, there will be unintended consequences that will cause investment to go down and jobs to be lost.
Additionally, Shammo was asked about the FCC's ruling late last year that provided clarification and guidance over what constitutes a "commercially reasonable" data roaming agreement. The decision was largely a win for T-Mobile US (NYSE:TMUS) and smaller carriers.
"Eventually, they will get to price regulation and that will be detrimental to the industry," Shammo said, arguing that companies that invest in their networks should be able to sell access to those networks at a rate they think can generate a financial return.
Under the agency's new roaming guidelines, if there is a dispute over a data roaming agreement between two carriers, the unhappy party could bring a complaint to the FCC. The FCC could then take into consideration the additional factors related to roaming rates that T-Mobile had sought to determine if the deal is commercially reasonable. However, the FCC could decide not to consider those factors.
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