Verizon wireless chief: Bundling has little value, but Verizon will target ‘underserved markets’

ronan dunne verizon
Ronan Dunne is the EVP and group president of Verizon Wireless. (Verizon)

During an appearance today at an investor event, the head of Verizon’s wireless business said he doesn’t see much value in bundling different services together. However, he did say that Verizon is monetizing its move to unlimited wireless data services, and that the carrier sees an opportunity to “address the underserved markets.”

“Quad play is an interesting thing for me,” said Ronan Dunne, EVP and group president of Verizon Wireless. Before joining Verizon late last year, Dunne was the chief executive of Telefónica’s business in the United Kingdom, operating under the O2 brand. “The really interesting insight in Europe is that, in markets where you have seen more bundling, it’s been less customer-demand driven than market structure factors.”

Dunne explained that bundling in Spain, for example, was used to increase the number of pay TV households by discounting prices for existing wireless customers who purchased TV. “So, the opportunity was about further penetration of one of the elements of the bundle,” he said.

“In competitive markets, and the U.S. is one, if you’ve got real choice in the individual products, the cost of bundling is that you end up taking the second-best wireless product and you map it to the third-best TV bundle in order to get the cheapest broadband connection or fiber connection. No wonder you get $5 off at the end of the bill,” Dunne explained. “So, I think from our point of view is focusing on being the preeminent wireless carrier in the marketplace is a very, very strong play to give the customers real choice.”

Dunne’s comments are particularly interesting in light of AT&T’s ongoing strategy of bundling its unlimited wireless services with its DirecTV Now streaming video offering.

In his comments this morning, Dunne also said that Verizon’s move to unlimited wireless data has been a positive for the carrier, but that it’s not the end of the road for Verizon’s strategic efforts.

“We are monetizing the move to unlimited. It’s actually enhancing our yield and it’s accretive. So, we’re seeing a lot more customers stepping up,” he said. “There’s still significant step-up opportunity.”

However, Dunne said that fully 20% of the carrier’s recent gross adds selected Verizon’s offer of 5 GB of monthly data for $55 per month, an offering the operator launched shortly before it began offering an unlimited data option.

“What you’ll find is a very focused, very forensic approach to the segments that are underserved and making sure that our proposition is what adds value, rather than simply looking at promotional activity to drive volume. So I’m much more interested in sustainable units of revenue rather than a debate about a specific gross add or net add,” he said. “And I think we have a real opportunity; we have significant segments that are underpenetrated where we can see ourselves picking up a number of parts of share in those segments with more targeted offerings.”

Rather than focusing exclusively on unlimited, “we’re going exactly the opposite direction,” he said. “What you will see is us broaden out the offering.”

Dunne also discussed a number of other items:

On 5G: Dunne said Verizon has started offering fixed 5G wireless services in eight of its planned 11 test markets to “friendly customers.” He said the carrier is testing things like signal propagation and whether customers can successfully self-install their own receiver antenna, and whether that antenna should be on the outside or inside of customers’ windows. Dunne also promised that Verizon would “be first” in the move to mobile 5G services.

On FirstNet: Although FirstNet and its carrier partner AT&T continue to sign up more states to their public safety network, Dunne said Verizon would continue to chase the public safety opportunity. “We are the No. 1 supplier to public service and public safety in the U.S.,” Dunne said, adding that Verizon today offers coverage on 700,000 additional square miles more than FirstNet and its partner AT&T. “We’ll be competing very strongly for all of that business.”