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Verizon cutting wireline, DirecTV ties as it shacks up with cable

Verizon’s(s VZ) blockbuster deal to buy spectrum from and partner with major cable operators has made casualties of its future residential broadband expansion plans and its partnership with DirecTV(s DTV). While none of this comes as surprise, given all the moves Verizon has taken to minimize its wireline business and focus on wireless, Verizon appears to be wasting little time in embracing its former rivals, Comcast (s cmsca) and Time Warner(s TWC), and overturning the competitive dynamics of the residential broadband industry.

Verizon Communications CEO Lowell McAdam confirmed at an analyst conference on Tuesday Wednesday that the company has no plans to resume its FiOS expansion after it reaches its target of 18 million homes, pursuing instead joint offerings with Comcast and Time Warner. There also isn’t any room for partner DirecTV in the new Verizon-cable love fest. DirecTV and Verizon began trialing a residential LTE service last year, that combined TV and programming through a satellite dish equipped with an LTE transmitter. But McAdam confirmed that partnership is now dead.

“One of our hallmarks is focus, and we’re focused on getting Comcast up and running, and I can’t do both, so we made our choice,” Verizon CEO Lowell McAdam said in a quote from newsletter Communications Daily reported by Light Reading.

At the UBS analyst conference, McAdam said Verizon still planned to compete fiercely with the cable operators in markets where it already has FiOS services. But in all other cases, it would look to cross-sell its wireless service with Comcast and Time Warner’s cable services. Here’s an excerpt from the transcript:

“…if I look back 18 to 24 months ago we saw what the promise of LTE was and we looked at our FiOS asset. We said, wow, finally you are going to be able to do these quad-plays and have video move seamlessly between the desktop and the TV set and your tablet and your smartphone. The technology base will really support that.

“So we were well down the road in developing that for FiOS and then the opportunity came up to partner with Comcast — that is where the discussions really began — that gave us the nationwide play. Because while we could do it and do it very well within the FiOS footprint, wireless is a national asset and I needed to look for an opportunity to expand that scale. So that is when we started talking about a joint venture where we could develop these integrated, truly integrated, products and bring them around nationwide.”

So where does that leave the rest of wireline industry? Verizon has a sanctioned monopoly in its territories, and the only competition it faced on wireline came from the cable operators. Except in the markets where Verizon has built up its fiber service, that competitive balance disappears. When Verizon first announced its deal with the cable operators last week, Stacey wrote that the partnership essentially spelled the end of wireline competition:

“As Verizon has rolled out its fiber-to-the-home (FTTH) offerings, it has sold off many elements of its older DSL businesses, and is now positioning its LTE wireless service as a competitor to DSL. This is bad news for Frontier (s ftr), CenturyLink (s ctl) and AT&T’s (s t) markets that don’t have U-verse, but it won’t bother cable providers, which have or are in the midst of upgrading their networks to faster DOCSIS 3.0 systems that can deliver 100 Mbps service.

“Cable companies are already taking over at the nation’s primary broadband providers as people dump DSL lines in droves. The problem is that for many consumers a choice between DSL, LTE or cable isn’t really much of a choice at all. Cable networks upgraded to DOCSIS 3 can be much faster than DSL or LTE, and it’s hard to imagine a consumer seeing the options as equal. The best hope for a better competitor to cable is FTTH (not even AT&T’s fiber-to-the-node technology that U-verse offers), and it’s possible that Verizon no longer has much reason to roll out fiber further so it doesn’t upset its new partners. This is why both AT&T and consumers are on the losing end of this agreement.”

11 Responses to “Verizon cutting wireline, DirecTV ties as it shacks up with cable”

  1. FIOS service is superior to cable. This is such a huge mistake; however, this is what happens when you put someone in charge who has no clue how to do anything but run Wireless. And it’s a very convenient way to replace 45k people waiting for a contract who have not taken a wage increase in the past two contracts to keep their benefits. FCC, please do the right thing here.

  2. Bad enough what they are doing to their employees..but what about what they are doing to the USA having a competitive high speed internet network? The govt shouldnt be giving them any breaks because they are investing as little as possible in the infrastructure.

  3. Brian D Powers

    Wont be long now, couple years, 1 giant corporation will rule our entire world and lives. Fascism made a comeback right here in the good ole United States of America, (a subsidiary of Time-Warner)

  4. Lowell wants to take approx. $100 a week from 45,000 employees. Due the math. $4.5 million a week, that’s $234,000,000 million a year. This is a company reporting profits in the billions, pays their higher ups millions. And yet they want to hit up its employees who make this company what it is. And that $100 is being optimistic, a family of four will probably cost more. This move will allow lower quality products and installations into customers homes and businesses yet will demand higher prices and unnecessary bundling of products. Might as well tattoo VCast on our foreheads now. Funny, I think Verizon already owns the term VCast. Hmmm.

  5. People better wake up. FIOS is becoming a larger scale Avis failure from Bell Atlantics early 90’s venture in NJ. Lowell McAdams is going to personally destroy customer satisfaction and quality in search of the “holy Grail” that is the quick buck. At what expense, look at what he’s doing to 45,000 employees. 45,000. These hardworking 45,000 employees try everyday to satisfy our customers, if you’ve dealt with Verizon lately for some satisfaction you know how difficult that is. It’s the constraints being forced on the employees by higher ups such as Lowell that is keeping them from satisfying customers, not only that but they are threatened everyday about quantity of jobs per day that affects the quality of the services being installed. Btw 40 technicians were targeted and recently fired. These 40 technicians were fired for conduct while on strike, for words.(not sabotage, assault, stealing). WORDS people, first ammendment anyone. Or is Verizon above that. Good luck my brothers and sisters of IBEW and CWA. One more thing people UNION is not a “four letter” word it’s five, and what this country was founded on. Thank You.