Verizon Eyes 5G Future as Fios TV Ups Sub Losses
January 23, 2018
Verizon Jan. 23 announced it plans to roll out 5G wireless functionality in upwards of five major cities in the second half of this year – the first wireless carrier to do so.
The technology should dramatically increase streaming video speeds, with 5G download speeds up to 10 gigabits-per-second compared to one gigabit-per-second for 4G LTE. The higher speed could result in downloading a HD movie in seconds.
Verizon aims to harness 5G technology with its new Oath platform, whose content brands include Yahoo, HuffPost, AOL, Tech Crunch and Engadget, among others.
The telecom, which recently inked license deals with the NBA and NFL, added 47,000 Fios high-speed Internet customers to end the fourth quarter (ended Dec. 31, 2017) with 5.9 million subs.
“The next industrial revolution will be on Verizon’s [5G] network and will positively impact society like no technology we have seen before,” CEO Lowell McAdam boasted on the fiscal call.
Meanwhile, Verizon’s pay-TV platform, Fios video, lost 29,000 subs in the quarter, to end the year down 75,000 subs at 4.6 million.
When asked whether Verizon would follow in the footsteps of AT&T and Walt Disney seeking to acquire a media company, McAdam punted. The executive admitted Disney’s acquisition of 20th Century Fox underscores the value of scale in the market place.
McAdam said the jury is out regarding the merits of Verizon acting as an independent distributor of content compared to owning and creating content.
“I think until all of this media consolidation [AT&T/Time Warner, Disney/Fox] shakes out, you really can’t determine whether that’s a path we would be interested in,” he said. “But I can say unequivocally there is nothing going on right now without considering a large media play [involved].”
“In fact, if you look at our actions like the NBA and the NFL announcement … we think being able to monetize through advertising and being independent is a very good place to play for us right now.”
Wall Street remains on the fence regarding Verizon’s first-mover 5G strategy.
“5G is going to be a hundred times faster than your typical Internet service, so not only is it going to be faster, it’s going to have better margins and give Verizon a ton of opportunity for new customer growth,” Michelle McKinnon, analyst with Payne Capital Management, told CNBC.
Jonathan Chaplin, analyst with New Street Research, said that while 5G enables Verizon to bridge technology divides in the market, doing so comes at a major fiscal cost.
“We’ve pegged it at least at $35 billion dollars,” Chaplin said. “That’s going to [more than] absorb the gains [Verizon is] going to get in tax reform savings over the next four or five years — which I don’t think the market is anticipating.”