According to recent (mid-December 2009) press Verizon will be trumped by TeliaSonera in the LTE deployment game. Let me tell you Verizon’s secret of its success. Verizon is not a technology leader; it is a technology follower that focuses on the marketplace and the fundamentals of service provisioning.
Verizon did what it had to do this year - Verizon said it would deploy early and small systems in late 2010; this is standard “carrier speak” for late 2010 or maybe early 2011. This type of talk keeps their name (Verizon) in the papers and keeps shareholder happy. However, Verizon does not take technology risks when it does not have to.
Frankly who cares if Verizon is first or second? Verizon, even when it was Bell Atlantic and NYNEX, has not let technology drive the company(s) since the late 1980s. Marketing (and hence customers) drive the technology deployments in Verizon. Verizon is a conservatively run (and yes, well run) carrier.
What analysts need to focus on is: After Comcast acquires NBC Universal what will Verizon and AT&T do in response?
Imagine Comcast (with NBC Universal in tow) merging with Sprint Nextel. Now suddenly we have a landline –wireless juggernaut with content. Comcast alone was and still is not powerful enough to take on Verizon Communications, Inc. or AT&T, Incorporated. Adding NBC gives Comcast creative capability.
Given AT&T’s current state I doubt it has the presence of mind to even consider acquiring/merging with a media company. However, Verizon is a different matter altogether.
Verizon owns a landline carrier and wireless carrier. The company made no secret that it is seeking to sell off significant portions of the landline business to someone. By selling off property to Fairpoint, Verizon got out of New England. Verizon once had upstate New York on the market but had to remove because it could not get the price it wanted per access line. Verizon’s landline business is fiber, specifically FiOS. Verizon is now selling content even region or community specific content. A few years ago a Wall Street analyst once told me that community access channels highlighting events like the local high school’s football scores, the local library’s children’s reading, etc., were non-essential and useless programming. In fact this knucklehead went so far as saying that he would object (loudly) if Verizon went so far as t provide that type of programming. Guess what, Verizon now provides that type of programming. Why? Because, Verizon recognizes that in order for it to be successful in the content business it needs to localize and customize content programming. Local television stations make a lot of money. Thank goodness, Verizon did not listen to that analyst. Verizon’s FiOS programming is designed to pit it against the likes of Comcast and other cable television companies.
Now, with a new Comcast being cast, Verizon needs to take countermeasures. The only thing I can think of is Verizon merging with a content company. The question is: What content company should Verizon merge with?
In my opinion, Verizon can merge with either Disney or Fox. Frankly I think Disney is a long shot. I think Fox would be a more likely candidate. Disney currently has wide distribution for its content via theaters and the ABC network. Fox is a growing and very hungry content company. Fox (its owner is News Corporation) has wide distribution through its cable channel. Fox is in the newspaper business during a time when newspapers are rapidly going the route of the dinosaurs. However, I have always agreed with the decision. News Corp’s ownership of the Wall Street Journal places it right smack in the middle of every important financial discussion in the world. News Corp is a hungry company and I believe it recognizes the importance of telecom and how it touches