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Mobile Video

Verizon Sees Video Through Rings of Fiber

Verizon hasn't been bullish on new fiber for its Fios platform in several years. The telco stopped investing in Fios deployments four or five years ago, and after the expected spring closing of a divestiture of several Fios markets to Frontier, Verizon will have consolidated its residential fiber infrastructure to a swath of territory on the East Coast.

But that doesn't mean Verizon Communications Inc. (NYSE: VZ) is giving up on fiber for video delivery. It just means the company's strategy has shifted.

In keeping with Verizon's focus on its wireless business, the telco has changed gears in video to prioritize its new mobile-first Go90 service. Verizon has much to prove on the content front with Go90 -- specifically, whether or not young audiences want another online video portal. But, from a technology perspective, the company has laid a solid foundation for growth. (See Verizon's Go90 Is Live – Will Anyone Watch? and Verizon Builds Toward OTT Launch .)

The most recent evidence for that foundation is Verizon's acquisition of XO Communications. (See Verizon Bags XO for $1.8B.)

As Verizon EVP and CFO Fran Shammo explained it today at the Deutsche Bank 24th Annual Media, Internet & Telecom Conference, "XO has a lot of very good fiber around metropolitan areas," and those metro fiber rings are very good for video delivery.

"We actually pay a lot of third parties to carry a lot of our traffic to the last mile," Shammo continued. "This actually gives us the capability to move some of that traffic over to our own network when we close the deal so there's a synergy in that."

Ultimately, Verizon wants the video traffic it's carrying to bring in new revenue from advertising dollars. But regardless of whether or not Verizon can make that happen with Go90, it has to protect the quality of the video experience on its network in order to preserve its wireless broadband leadership.


For more on TV market trends, check out our dedicated video services content channel here on Light Reading.


"The user experience is going to be key," Shammo pointed out. "And there are some folks that say the network was more important in voice because you didn't like a dropped call; it's not as important in video. I would argue it's more important in video because the most frustrating thing for anyone is to get the spinning wheel, or for a download to take five minutes when it should take 30 seconds. So the network is going to be critical in a video world."

In theory, Verizon is following the same principle in its wireline business. Shammo acknowledged that while Fios TV continued to see subscriber growth throughout 2015, broadband has become the more important consumer service. Verizon hasn't been willing to invest in new fiber to support the residential broadband business in recent years, but it believes it still has a competitive advantage because of its fiber-to-the-home rollouts in years past. Those prior investments are supporting online video streaming for Fios subscribers, while new fiber acquisitions are falling into place to support streaming over wireless connections.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

kq4ym 3/15/2016 | 2:45:13 PM
Re: Trucks vs. vans It may be interesting to see if providers start going after niche markets. Even Colbert's CBS Late Show seems to be going after the younger crowd much more that his previous Comedy Central show. But it may be valid to accept that Verizon's (and other's?) "prior investments are supporting online video streaming for Fios subscribers, while new fiber acquisitions are falling into place to support streaming over wireless."
KBode 3/14/2016 | 8:09:00 PM
Re: Trucks vs. vans No matter the generation, I don't think most marketers give young people enough credit. They can smell somebody or a company "trying too hard" from about 100 yards, and I certainly  think that's probably the case here. That and there's nothing that Verizon appears to be offering that isn't already available elsewhere. YouTube especially is a pretty captive market I think it's probably hard for "ye olde telco" to compete with on its turf anyway.

These telecom companies waste billions annually trying to be something they're not in the pursuit of quarter over quarter growth.
msilbey 3/14/2016 | 2:05:52 PM
Re: Trucks vs. vans I have to admit, I actually uninstalled the app after installing it to get the free data. I am absolutely not the target audience, but I wonder how Verizon is attempting to reach its target, and whether that demographic will care even if they know Go90 exists. It literally almost pains me to see where Verizon ended up with its OTT/mobile offering. So much promise on the technology side. But that means nothing if they don't have the right content and marketing strategies. 
KBode 3/10/2016 | 7:35:37 PM
Re: Trucks vs. vans Yeah I think the free data giveaway is likely responsible for a huge swath of this service's current roster, since users didn't even need to really use the app to get the free allotment, yet I'm sure Verizon counted them as users. UBS analyst this week shed a little skepticism on how well Go90 is doing:

 

http://www.fiercewireless.com/story/ubs-verizons-go90-slow-start-will-be-hard-pressed-mount-meaningful-challeng/2016-03-10
wanlord 3/9/2016 | 6:25:25 PM
Re: Trucks vs. vans I suspect the 2M downloads was due to all the marketing and the free data increase. I suspect the usage is low, like really low, like 1% actually use the app on a weekly basis. And that 1% is probably VZ employees. 

 

 
jbtombes 3/9/2016 | 3:41:24 PM
Trucks vs. vans The XO assets are for hauling video around metros, like tractor trailers, and dropping them off at distribution points. Wireless is the delivery van. But who's buying? (Good Q Kbode.) VZ said they had 2m downoads end of 2015. Is that any good?
KBode 3/8/2016 | 7:58:59 PM
G090... Does anybody really think Verizon's Go90 attempt to target Millennials will see serious traction? I tinkered with it briefly and it just seemed like a fairly clunky "me too" type of affair, but then again I'm not the target audience.
steve q 3/8/2016 | 7:54:51 PM
Re: verizon So does Verizon have any idea to point the the customer to . Know there saying fios video may be the key, and then they hope G90 is the platform. I myself say verizon has to build a network that everyone can use at the best pricing .
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