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Verizon CFO: FCC Ruling 'Cluttered' Broadband Future

2 Mar, 2015 By: Erik Gruenwedel

Verizon CFO Francis Shammo

Francis Shammo says ISP reclassification as utility could affect investment and innovation going forward

A promising broadband investment landscape received unwanted intrusion (regulation) following the Federal Communications Commission’s recent 3-2 vote in favor of reclassifying the nation’s ISPs under Title II of the Communications Act of 1934, Verizon CFO Francis Shammo told an investor group.

Speaking March 2 at the Morgan Stanley’s 2015 Technology, Media & Telecom confab in San Francisco, Shammo said that while the exact language of the FCC ruling hasn’t been available to the public, the mere specter of regulation is not a good thing.

The CFO said that prior to the FCC vote, Verizon saw an open playing field to invest, innovate and deliver products to the consumer.

“Now, that field has been cluttered up with a lot of obstacles,” Shammo said. “It’s going to be more difficult to invest, more difficult to innovate.”

Specifically, he said that innovation would now require navigating burdensome regulation on select areas of broadband distribution — a reality Shammo said invites confusion.

“I’m pretty much assured [the FCC vote] will have an impact on investment and innovation over the longer term just like we’ve seen in Europe and other places,” he said. “But, you can probably make the assumption there’s going to be a lot of litigation around this one when it’s all said and done.”

Meanwhile, Shammo said the telecom’s pending mobile video over-the-top platform would combine Verizon Digital Media Services, Edgecast and OnCue to deliver a “very viable” consumer product that can do “a lot of things."

“There’s going to be very different models in mobile video than there [is] in the linear TV. You can’t make money paying $5 [to content holders] for every subscriber you have. With 103 million [mobile] subs, it doesn’t make economic sense. And the content holders know that,” he said.

The CFO said the platform would attempt to meld multicast technology as during Verizon’s exclusive mobile wireless distribution rights to the Super Bowl and select IndyCar events.

Shammo said exclusive content would be a component of the mobile OTT service, but different from traditional linear TV. He said retransmissions deals with the NFL and IndyCar have shown Verizon how people consume wireless content.

Notably, the CFO said the average mobile video user consumes about 30 minutes of content daily spread out over short clips.

“You’re not going to watch a linear TV program here. The NFL has been a huge success during the [football] season. We saw a lot of growth in our consumer usage during that. Similar to what we saw in the World Cup. We’re learning a lot about usage patterns that we’re going to adopt in over-the-top video.”


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