Verizon's (NYSE: VZ) future growth will come from things like the Internet of Things (IoT) and over-the-top (OTT) mobile video--things that some other companies are not even investing in today, the company's CFO Fran Shammo said during an investment conference on Monday.
"It's not just going to be about the net adds anymore," he said at the Morgan Stanley Technology, Media & Telecom Conference 2015. Things like the IoT and products like its "mobile first" OTT video offering due to launch this summer are going to contribute to revenue growth, he said, noting that the IoT is growing almost 45 percent year-over-year. "This is a tremendous growth not only for Verizon, but also for the industry," he said.
In a session that touched on everything from net adds to net neutrality and Google's (NASDAQ: GOOG) upcoming MVNO, Shammo also made it clear that Verizon is standing behind its ever-important network.
He said there are a lot of claims being made by a lot of people around network quality in the consumer market, and Verizon is trying to send a message about how its network is different. "I think consumers are getting confused about network quality. Really what we're driving now is to say, 'don't settle for less' because network is important and when you're going to need it the most, you're going to want it to be there," he said. "We know we're the most reliable and we know we're the best," and the company will be doing more in 2015 to get that message across.
Interestingly, he said Verizon entered the recently completed AWS-3 spectrum auction knowing that spectrum prices would be driven up, probably more so than any previous auction. But about mid-way through, it became clear that it didn't always make sense to try to buy spectrum in certain markets where the prices made it uneconomical.
In the past, it was generally thought to be more efficient to buy spectrum than to build capacity. "This auction flipped that equation in certain markets," he said. "We became much more diligent in which markets we strategically wanted and we were willing to let other markets go," because it would have required spending a lot more and the company could create the same capacity by spending a lot less.
People often think of spectrum as the Holy Grail, but that is changing, he said. "Technology has changed so much," he said, pointing to small cell technology and diversified antenna systems. In cities like Chicago, small cells are being attached to lamp posts, and while those types of scenarios come with operational expenses, it's still more economical in some cases than buying up more spectrum.
As for any ideas about third parties buying spectrum so that they could hold it hostage--he said that's a false assumption. "If I really needed that spectrum, I would have bought it in the auction. I wouldn't be held hostage to some third party," he said.
Shammo didn't reveal much by way of details about this summer's OTT video service/product release. He said Verizon Digital Media Services acquired content delivery network EdgeCast Networks, UpLynk and OnCue, and that's all part of the platform that Marnie Walden, EVP and president of Product and New Business Innovation, is developing.
But he gave some hints, saying that multicast technology is ready to go, noting it's a very efficient way to deliver a very large event to millions of customers at the same time, like a Super Bowl or a concert, "so that will be a component of this," but it will be a lot more than that, he added.
Regarding the FCC's 3-2 vote last week to pass Title II/net neutrality regulation, he said a lot of details have yet to be revealed--the 300+-page order has not been released--and that will be something to look for in the next couple of weeks.
But essentially, "the way I could put it plainly is, as we sat here yesterday and we looked out in front of us, we had an open field" in which to invest, innovate, deliver products and drive growth, he said. "Now that field has been cluttered up with a lot of obstacles," and it's going to be more difficult to invest and innovate because now the company has to navigate what is regulated and what isn't regulated. Like other industry executives, he said to expect a lot of litigation before it's all said and done.
Regarding Google's plans for an MVNO, Shammo is taking a "wait-and-see" approach on how that comes out, but he said he's not real concerned at this point about competition there.
- listen to the webcast (reg. req.)
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