Verizon CEO Lowell McAdam is pitching a form of integrated wireless and wireline cable TV package if the government approves its plans to buy $4 billion worth of spectrum from a variety of cable companies. McAdam told the Wall Street Journal about his plans, but so many aspects of the article don’t add up that it reminds me of sleight of hand.
Verizon’s offering a shiny flourish around integrated video to hide the truth: that this proposed spectrum buy isn’t good for consumers and won’t make their TV experience better at all. The Journal’s article neglects to ask some big questions, and when I emailed Verizon to get some clarity a spokesman declined to comment beyond what was in the article. He emailed, “Lowell was simply describing possible outcomes from our joint venture, but he wasn’t announcing products or giving any precise plans. We’ve got nothing to add at this point.”
So let’s go to the article and figure out what should be asked.
Do consumers want cable on their phones (specifically over cellular)?
Let’s start with the idea of a smaller cable package for mobile video. The Journal quotes McAdam as saying:
“Most content providers realize that the number of channels and the layout that you have within your home may not be appropriate for the mobile environment, and those discussions are just beginning now,” Mr. McAdam said. Some content providers, he said, “have come to us and have said, ‘We are willing to do an à la carte approach here.'”
But in a world where I can get cable content on my iPad through many providers such as Comcast and Time Warner Cable over Wi-Fi, why would I want to subscribe to a mobile channel a la carte? Does Verizon really think consumers have a burning desire to watch Project Runway via their cellular data plan? At about $10 an hour for a mobile video, that’s pretty expensive. Plus, if people really want to pay for that, Comcast at least has 3G on its Xfinity app roadmap.
Also, would consumers have to pay for these mobile channels on top of their regular cable subscription? If so, how is that integrated? Also, isn’t Verizon killing its unlimited plans and trying to buy this extra spectrum because the influx of video on its network is just overwhelming it?
It’s been about two years since Qualcomm gave up and shut down its MediaFLO mobile video service because of a lack of interest. Now, the services aren’t exactly similar, because MediaFLO let consumers watch broadcast TV on their phones using the MediaFLO network, but still, the idea that consumers are so desperate to stream their VoD content on their phones and via the pricey cellular network seems like a reach to me. It’s like asking the FCC to approve the merger for the 1 percent.
Oh look, a red herring!
In addition to the la carte pricing for mobile cable, the article seemingly ties a la carte pricing to the lack of growth in the pay TV industry. But why mobile a la carte and the lack of growth relate is really beyond me, given that the deals required to do a la carte on mobile would require content companies to deal with Verizon and the article doesn’t lay out how that particular action would help the cable and pay TV industry grow. So how can whatever service Verizon is proposing be considered integrated since Verizon is talking about mobile only?
Another thing that will surely help distract consumers from thinking too deeply about the usefulness of the “integrated video” service McAdam pitches is the final paragraph at the end:
Mr. McAdam said that Verizon, like AT&T, is looking at ways to bill content providers for the data their offerings consume, thereby exempting them from counting against consumers’ allotments of data. But he said he didn’t view such arrangements as necessary for mobile video to be adopted more broadly, predicting that data prices would fall and consumers would become willing to pay more for wireless services.
“On the wireless side, I think the bill will probably go up because people are going to be using it a lot more,” Mr. McAdam said.
Say what? First, why bring up the idea that Verizon is thinking along the lines of AT&T when it comes to charging content providers for data as opposed to charging consumers, when in the very next sentence the article says McAdam doesn’t believe that’s necessary for consumers to adopt mobile video? Second, what happened to the integrated mobile a la carte cable plan McAdam was discussing, does he think that pricing model might be relevant there? We don’t know.
It looks like Verizon may have found someone happy enough to listen to its CEO spout fluffy future plans that don’t seem to add up in the hopes of making its planned spectrum buy sound good.