Wednesday, September 22, 2010

Verizon's Seidenberg: Rapid Mobile Growth, OTT Threatens Cable TV

The mobile industry has entered a period of rapid innovation with step-function growth in services and revenues, said Ivan Seidenberg, Verizon's Chairman and CEO, speaking at the Goldman Sachs Communacopia XIX Conference.
Seidenberg expects the smartphone penetration rate in the U.S. to rise to 70% by 2015. Meanwhile, the overall mobile penetration rate with pass 100% as more people carry 2 or more connected-devices wherever they go. Seidenberg expects these trends to impact all segments of the consumer and business markets. He believes Verizon is well-positioned for this period of bullish growth.

Regarding the iPhone, Seidenberg said he would welcome it, but that the Droid is proving to be a great alternative and that the company is not suffering from an "iPhone deficit". He expects the upcoming 4G launch will be a great platform for manufactures to launch a new range tablets and phones.

As for 4G pricing tiers, Seidenberg agrees with AT&T's move to tiered data plans, but that Verizon's LTE network provides it with the ability to offer unique plans. Key advantages that he sees are Verizon's 700 MHz spectrum and a rapid rollout that will give national coverage over the next 24 months.

Seidenberg also predicted rapid change in the multichannel video market. He expects the cable operators are facing a downward trend as "cord cutters", especially the younger demographics, give up pricey monthly cable bills in favor of over-the-top content. He does expect a steady, paid TV client base in many segments especially for high-end 3D TV. However, he believes but that the OTT trend will impact the cable business much like how traditional voice service were hit mobile and VoIP substitution. He thinks Verizon is better positioned than its cable peers because the FiOS network is built to handle high data rates for carrying IP traffic and because the company's newer FiOS TV subscriber base has lower exposure in the market. He would like to see both the FiOS and 4G networks take advantage of these new content models.