The VZW-SpectrumCo deal has every blogger in a frenzy. GigaOm is writing how DirecTV's partnership with VZT is over since VZ will start selling cable's TV product. My head hurts from even reading that. The Duopoly are going to start re-selling each others services? Where and when?
Yes, the SpectrumCo MSO's - BHN, TWC and Comcast - will be selling VZW mobile data and voice as sales agents (like Qwest). I don't know how they leap from that to VZT is going to be selling Comcast TV. But the WSJ printed, "Then these rivals will cooperate and cross-sell their services in ways to confound regulators who pay lip service to creative destruction but still expect businesses to stay in their neat categories."
FiOS is done. That project was a financial failure for VZ, because it costs more than they thought to pass a house with fiber, acquire that customer, install that service over the FiOS network, and retain that customer. The costs were higher, the take rate was lower (expectation was 50%, they are at 28% partially due to MDU FiOS projects) and the ARPU was lower. It's as low as $79 for a triple play bundle in Tampa - not including the huge fees and add-on charges.
VZW is piloting fixed LTE, maybe in conjunction with DirecTV to sell more broadband and voice. DirecTV has installers for this. However, GigaOm reports that Verizon Communications CEO Lowell McAdam confirmed this pilot is dead. This doesn't mean DSL is dead (as DSLR is speculating and what LightReading is saying). DSL has always been under attack by cable. Cable won. Cheaper and faster (at least as marketed.) But not everyone cares! Some people want cheap broadband (DSL). Some people still want to pay $20 per month for dial-up!!! So who knows?
Has VZ given up on copper and fiber? Maybe for this quarter. As soon as the landline revenues drop enough for a stock hit, Lowell will have to re-steer the ship again.
And wait for it....
What are the cable magazines writing? That Cable is getting out of TV!!!
Why? Because content - especially ESPN and other sports stations owned by cablecos - is getting too expensive. Cable-cutting has started. Google, Netflix, Apple, Amazon and soon DISH (which owns Blockbuster) are all eating into the lucrative VOD/PPV (video-on-demand and pay-per-view systems). The economy has not helped.
As there was a shift at ATT and VZ when they announced that they were mobile companies last year, Time-Warner Cable's strategy chief, Peter Stern: "We're basically a broadband (Internet) provider....As a convenience to our customers we (also) package and distribute television (programming)". See that shift?!
Cable is the winner because the MSO's had $100B in debt from DOCSIS 2.0 upgrades, which gave them the necessary network plant for HDTV and Internet. TV gave them the eyeballs. Moving to Internet was gravy, since TV is the least profitable service in the triple-play (just ask Frontier or VZ).
VZ and ILEC's can't give up the ghost on wireline yet anyway. Why? Business services. Voice and data to businesses is a huge revenue silo for ILECs.
If Clearwire had its act together, it could have been the LTE or WiMAX provider for the cablecos. Sprint has been too busy rearranging deck chairs to do what it needed to do to solidify its partnership with cablecos (going back to Pivot).
Having dealt with VZ, I wonder how long the 3 SpectrumCo partners will feel like "partners" before they are reaching for lawyers.
Too many moving parts. The FCC has to approve it.
Peter Radizeski is a telecommunications consultant and analyst with RAD-INFO INC.
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