Verizon CEO says Their Voice Business is Dying. Time To Go Into TV?
Okay, though he used a little more nuance, that’s the essence of what Ivan Seidenberg, Verizon’s CEO, said loud and clear in recent comments at Goldman Sachs.
The issue there is perhaps it is like the dog chasing the bus a little bit. So what I need to do is get ourselves focused around the following idea, that video is going to be the core product in the fixed line business. … I shed myself of the burden of chasing the inflection point in access lines and say I don’t care about that anymore.”
Translation: voice is dead to me. POTS (plain old telephone service) is no longer the bread and butter of Verizon.
A decade ago, this wasn’t the case. Verizon (and before them NYNEX) fought desperately to keep customers from migrating to DSL and optical services, by making sure that T1-lines (which are based on POTS service) were the only built-out infrastructure in their system.
From 1999 to 2002, I helped put several million dollars of investment into building out non-POTS services on the Verizon network. This was the Massachusetts Community Network, which Verizon resisted as if their business model depended on it. Their staff and VARs frequently said “the investment in POTS wasn’t fully capitalized, and that it couldn’t be abandoned for new products without returning on its investment.”
Perhaps competition, time and diversification of the wireless unit have brought Verizon to make this shift. Increasingly, they speak of themselves as a media company. As Comcast pursues the purchase of NBC, can a Verizon broadcast play be far behind?
Verizon remains one of the most profitable companies in the world, but the wireline business is heading downhill so fast, JPMorgan writes, “Action will likely be necessary to support the dividend beginning in 2012.”
A decade ago the phone company wasn’t ready to change. The questions now: can it change fast enough?
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