Last week, Verizon announced a $3.6 billion deal to buy wireless spectrum from cable operators and resell their pay-TV services. This week, Lowell McAdam, Verizon’s CEO, started to lay out how that deal will impact other services operated and sold by the carrier: it looks like it will not continue to build out its FiOS broadband and IPTV network when it finishes the current planned phase.
The company has also said that it will not extend a trial it had been running with DirectTV since last year — although this will not be because of the agreement that it signed with Comcast (NSDQ: CMCSA), Time Warner Cable (NYSE: TWC) and Bright House Networks and is now awaiting approval from regulators.
The cable deal will not only give Verizon a significant lift in wireless spectrum assets — SpectrumCo, the cable JV, will be handing over 122 spectrum licenses for advanced wireless services, which cover 259 million POPs — but it will also allow the carrier the chance to bundle its wireless services with pay-TV operations that extend far beyond the current footprint of the company’s FiOS fiber-optic network.
At the UBS Media and Communications Conference this week, McAdam noted that as a result of this, it would no longer have a need to aim for a costly build out fiber-optic connection into all homes after it reaches a target of about 18 million. “We are going to build out what we said and not any more,” he told the conference (via transcript on Verizon’s site).
Meanwhile, the company also looks to be ending another venture, but it is apparently unconnected to the cable deal: the company is concluding a trial that it started last year with DirectTV offering TV, satellite and broadband access via an LTE receiver on the satellite dish. “The trials are done because the trials were scheduled to be done. This is not linked in any way at all,” a spokesperson told FierceWireless today.
McAdam played down the idea of how, exactly, it would push innovation on its FiOS service while at the same time reselling services from its competitors:
“This obviously, as you can imagine, was the topic of deep discussion with Comcast and Time (NYSE: TWX) Warner,” he told the audience at the UBS conference. “The theory is, though, that all boats will rise, so FiOS will not be disadvantaged in any way. If I put my Verizon hat on, we think that the FiOS platform is the strongest platform and each partner can take the core product and do some innovation on top of that if they choose to…FiOS will have a bunch of very good products that will come that, frankly — and come faster than it would have come if we tried to do it on our own.”
Verizon has been the subject of speculation this week over whether it would be launching a streamed service that would compete with the likes of Netflix (NSDQ: NFLX). Some have suggested that it could partner with Netflix competitor Redbox on the project.