Reviews:
 ·Frontier Communi..
| reply to mech1164
Re: Follow the money said by mech1164:And now with their capitulation with Cable, FIOS is not going anywhere anymore. Will it come back? He didn't say they'll never be expanding their footprint, he said, "And at this point we won't build beyond that, because at this point we have to capitalize on what we have invested."
Verizon has a limited amount of capital to invest in network expansion, and much of that capital is currently going to the LTE build. Wireless is still a growth industry, there are millions of people out there that don't have smartphones, and it makes sense for Verizon to focus on grabbing as many of them as they can.
To be sure, there is money to be made on the wireline side of things, but there isn't as much growth potential as with wireless. Most people who are willing to sign up for a triple play already have, so at this point the only way to expand your customer base is to engage in a price war with the cable companies. Such a price war isn't necessary in wireless, not yet anyway, because it's still a growth market. You don't have to undermine your competition when there are plenty of new customers to go around for everybody.
The wireless market will mature by the end of the decade, perhaps sooner, and at that point Verizon will have the spare capital to put back into the wireline network. |
|
|
|
 mech1164I'll Be Back
join:2001-11-19
Lodi, NJ | said by Crookshanks:said by mech1164:And now with their capitulation with Cable, FIOS is not going anywhere anymore. Will it come back? To be sure, there is money to be made on the wireline side of things, but there isn't as much growth potential as with wireless. Most people who are willing to sign up for a triple play already have, so at this point the only way to expand your customer base is to engage in a price war with the cable companies. Such a price war isn't necessary in wireless, not yet anyway, because it's still a growth market. You don't have to undermine your competition when there are plenty of new customers to go around for everybody. The wireless market will mature by the end of the decade, perhaps sooner, and at that point Verizon will have the spare capital to put back into the wireline network. First you just made my point. They DON'T want to compete period.
Second if you do believe this I have a Bridge to sell you CHEAP! |
|
DampierPhillip M Dampier
join:2003-03-23
Rochester, NY | reply to Crookshanks
said by Crookshanks:said by mech1164:And now with their capitulation with Cable, FIOS is not going anywhere anymore. Will it come back? He didn't say they'll never be expanding their footprint, he said, "And at this point we won't build beyond that, because at this point we have to capitalize on what we have invested." Verizon has a limited amount of capital to invest in network expansion, and much of that capital is currently going to the LTE build. Wireless is still a growth industry, there are millions of people out there that don't have smartphones, and it makes sense for Verizon to focus on grabbing as many of them as they can. To be sure, there is money to be made on the wireline side of things, but there isn't as much growth potential as with wireless. Most people who are willing to sign up for a triple play already have, so at this point the only way to expand your customer base is to engage in a price war with the cable companies. Such a price war isn't necessary in wireless, not yet anyway, because it's still a growth market. You don't have to undermine your competition when there are plenty of new customers to go around for everybody. The wireless market will mature by the end of the decade, perhaps sooner, and at that point Verizon will have the spare capital to put back into the wireline network. You are dreaming, unfortunately.
CapEx on wireless is already flat to down, according to Shammo. Despite the cost reductions for LTE as that network matures, Shammo is not saying he is taking the savings to spend elsewhere. The overwhelming bulk of spending on wireline is to support Verizon Wireless cell towers.
Wireless growth is slowing, and AT&T and VZW have a cozy relationship with nearly identical pricing, so why start a price war to pick off customers from each other when you are both sitting pretty. All of the future boosts in ARPU will come from pricing adjustments and milking usage-based pricing for data. ARPU up equals a happy Wall Street.
The only way Verizon is going to spend money on FiOS expansion is if it is tied to some regulatory matter they are trying to get passed Washington. Example: Verizon acquires another cell company and, in return, promises to restart the FiOS build. Or Verizon wants out of the landline business in rural America and agrees to restart FiOS buildout to compensate.
The cable-wireless cross-promotion deal has built in disincentives for marketing FiOS. Verizon could easily tolerate this pushing the cable product in FiOS-less markets it has no intention of entering, now or later.
My personal feeling is the current Verizon CEO sees FiOS as a giant CapEx mistake made by a predecessor, and he wants to put a period on it for Wall Street worried about increased spending.
--
Phillip M. Dampier
Editor, Stop the Cap!
»stopthecap.com |
|
Reviews:
·Frontier Communi..
| reply to mech1164
said by mech1164:First you just made my point. They DON'T want to compete period. Why should they pour resources into a market with a lower ROI than they can earn in the wireless market? It's a for-profit corporation, not some sort of altruistic enterprise that exists to ensure that every American has access to FIOS.
The economics of the wireless industry will change as the market matures, and I'd be willing to wager that they'll turn more of their energies towards landline as that happens. Business needs to expand, or die, as the growth potential of wireless comes to an end they'll seek out other avenues to grow their business. Landline is the logical place for them to do this, they already have the know-how, and the underlying infrastructure is already in place. |
|
Reviews:
·Frontier Communi..
| reply to Dampier
said by Dampier:My personal feeling is the current Verizon CEO sees FiOS as a giant CapEx mistake made by a predecessor, and he wants to put a period on it for Wall Street worried about increased spending.
It probably was a mistake, at least at the time, from a purely business point of view. Unless you're talking about extreme speeds that no residential customer really needs, there's nothing you can deliver with FTTH that you can't deliver cheaper with FTTN/C. Frontier is working on bonded DSL/VDSL implementations that will compete favorably with cable, while maximizing existing infrastructure and requiring far less CapEx than FIOS. It'd be impressive to see what they could do if they had the resources of a Verizon or AT&T, without the distraction of wireless, but that's neither here nor there.
I'm not certain I buy your pessimism regarding the future of the industry. AT&T and Verizon's relationship isn't nearly as cozy as you suggest, they have two entirely different corporate cultures, as evidenced by their different approach to everything, labor relations, marketing, regulatory compliance, customer service, CapEx allocation, etc, etc.
Even if the relationship was that cozy, it's the nature of business to grow or die. As wireless growth slows down they will need to find other ways to grow their business, and landline is a logical place to do that. No company, not even one in a mono/duopoly setting, can afford to rest on its laurels while paying dividends.
If Verizon could sell their entire last mile landline business, today, I believe they would do so, particularly with the current management. They aren't going to be able to do that though, and the entire calculation will change in the coming years. |
|
CXM_SplicerLooking at the bigger picturePremium
join:2011-08-11
NYC
kudos:1 | reply to Crookshanks
Re: Follow the money I thought VZ and Cellco were two separate companies... why is VZ pumping money into Cellco rather than invest in its own business? |
|
openbox9Premium
join:2004-01-26
japan
kudos:2 | Cellco Partnership (d.b.a. Verizon Wireless) is a majority owned subsidiary of VZ. As a holding company, VZ consolidates Cellco's financial accounting with its own. Money flows both ways. |
|
CXM_SplicerLooking at the bigger picturePremium
join:2011-08-11
NYC
kudos:1 Reviews:
 ·Verizon FiOS
| That sure doesn't sound like two separate companies to me. Where did the baby bells, that Verizon if formed out of, get the money to purchase/expand their wireless divisions? And where did Verizon get the money to purchase the US portion of Vodaphone? |
|
openbox9Premium
join:2004-01-26
japan
kudos:2 | It's a partially owned subsidiary.
I'm not sure what you're asking regarding the financing of the business operations. Shooting from the hip I would suggest the financing came from multiple sources, to include cash reserves and debt and equity offerings. I'm sure there's more in the mix, but that's a start. |
|
CXM_SplicerLooking at the bigger picturePremium
join:2011-08-11
NYC
kudos:1 Reviews:
·Verizon FiOS
| quote:
I'm not sure what you're asking regarding the financing of the business operations.
Just keeping in line with the thread and following the money. The simplest answer to my question is 'from the wireline divisions' which further illustrates that, even though it is a partially owned subsidiary, the US portion of VZW is not somehow separate from VZ (which it is often touted as being). |
|
openbox9Premium
join:2004-01-26
japan
kudos:2 | said by CXM_Splicer:The simplest answer to my question is 'from the wireline divisions' which further illustrates that, even though it is a partially owned subsidiary, the US portion of VZW is not somehow separate from VZ (which it is often touted as being). That is a simplistic, yet not totally accurate answer. VZW is a subsidiary, primarily owned and managed by VZ. Legally, it's a separate company. Operationally, the two are intertwined to the point that there's not a whole lot of distinction between the two. Then again, I think you understand all of this. |
|
