Verizon's McAdam sees opportunity for converged video and security solutions

Verizon Communications' (NYSE:VZ) new product development group will focus on combining the company's wireless and wireline assets in areas including video and security, according to Verizon Communications CEO Lowell McAdam.

Verizon Communications CEO Lowell McAdam

McAdam

Speaking at the Morgan Stanley Technology, Media & Telecom Conference, McAdam said the new group will bring together assets from across the company's various product development teams. The group, which was announced last week, is called the Product Development and Management organization, and is being led by former Verizon Wireless COO Marni Walden, who will report directly to McAdam.

McAdam said that what Verizon is seeing in terms of customer requirements indicates that there is a demand for "far more integration of services." Without detailing specific products, he said that includes things like "video that moves seamlessly between landline and mobile" and mobile security assets that also work on wireline networks.

"The big challenge for us is integrating those assets into one set of solutions that works for customers," he said.

In December McAdam disclosed that Verizon was planning to augment its LTE network in 50 different cities with AWS spectrum in the first half of 2014 to avoid potential capacity issues. He said today that Verizon has now deployed AWS "in all of our major markets," including New York City and San Francisco. Around 20 to 25 percent of Verizon's smartphone base can access AWS spectrum for LTE today but nearly all new devices going forward will have the capability, he said.

Verizon Wireless Chief Network Officer Nicola Palmer has said that in every major city east of the Mississippi and in several western markets, Verizon is using a full 40 MHz of spectrum, twice as big as the 20 MHz network it deployed on its 700 MHz Upper C Block spectrum for its macro LTE deployment, which now covers 305 million POPs.

McAdam said that Verizon's 700 MHz spectrum and AWS spectrum for LTE are the cornerstones of its network, but that the carrier will continue to participate in secondary market transactions as well as upcoming spectrum auctions. However, he said he felt comfortable for the next few years in terms of spectrum. "We don't feel like we have a gun to our heads," he said.

The Verizon chief said the shift to Voice over LTE will allow the carrier to refarm some of its spectrum. Verizon has said it will commercially deploy VoLTE this year. McAdam said he is currently using a trial smartphone that runs VoLTE but that Verizon is still "getting the kinks out of it." He said that in 2015 and beyond moving to VoLTE will allow Verizon to start repurposing some of its 1900 MHz PCS spectrum for LTE, a process that AT&T Mobility (NYSE:T) has already started.

In terms of the much-discussed Internet of Things market, McAdam said that Verizon's first foray has been in telematics via its 2012 Hughes Telematics acquisition. That gives Verizon options in the automotive market, but Verizon sees opportunities in healthcare, energy management and traffic and intelligent transportation systems. "It won't be unusual three or four years from now for people to have five and 10 devices in their lives," McAdam said.

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