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Carrier Services
Verizon’s Captain Charts Slow, Steady Course
Seidenberg Sees Carrier Becoming ‘Rich Communications Company’
by Jim Barthold
Verizon Communications will transcend voice, entertainment
and wireless and become a “rich communications company”
by leveraging its disparate components, Chairman-CEO Ivan
Seidenberg said yesterday during a wide-ranging keynote
conversation at the McGraw-Hill Media Summit New York.
Verizon, the carrier’s chief said, is positioning itself as an
alternative to cable in the entertainment space with its Fios
initiative; a corporate player via its MCI acquisition and the
newly formed Verizon Business unit; and a leader through its
industry-leading Verizon Wireless.
Building a fiber optic network and acquiring content,
Seidenberg said, are only two challenges the carrier is facing
in its battle to become an alternative to cable. Regulation –
proposed and real and fueled by the incumbent cable
operators – will “be solved and we’ll move on … in two years
or less than that. It costs money but it’s the cost to get into
the market.”
The bigger problem, he said, is the “bizarre” behavior of
municipalities who demand amenities from Verizon in
exchange for being allowed to do business in their towns. The
carrier is flexing its government muscles seeking regulatory
help to thwart those sorts of local efforts, often initiated by
the incumbent competition.
Verizon, he said, is not awed by incumbent providers.
“We’re bigger than them anyway, so I don’t care,” he said.
The “devil-may-care” façade dropped when the Verizon chief
addressed the ongoing “net neutrality” issue where content
providers, with increasing help from the government, are
seeking to open up Verizon’s broadband networks.
“I hate the term,” Seidenberg said, noting Verizon doesn’t
block content providers using “best-effort” broadband
networks. Better levels of QoS, though, are expensive. “We
don’t block anything; never have, never will. It’s not part of
what we do.”
On the other hand, those riding on Verizon’s broadband
networks should be responsible for picking up some of the
costs of building an extensive backbone to carry heavier
traffic, he said.
“We won’t be quiet on the point. Everybody that participates
in the broadband world needs to participate” in paying for the
infrastructure, he said. “Everybody’s got to pay. We have a
right to extract value for what we build.”
With regulation looming, Seidenberg suggested “people come
to the table and talk this through and we stop this silliness
that’s going on with legislation.”
The other thing Seidenberg said he’d like to stop – although
he said he was somewhat powerless – is the negative view
investors take of the company’s stock valuation.
“I feel bad for our investors and employees because what we
do is more valuable than what’s been reflected in our stock,”
he said. “I can’t influence how the market treats valuations.”
Verizon’s goal, he said, is not flashy. It’s simply to be “big,
dumb and slow. We don’t view ourselves as sneaking up on
you.”
Putting $15 billion capital expenses primarily into the Fios
fiber optic-led infrastructure build-out this year, isn’t sneaking
up on anyone and is a little bit more than the company would
like to spend on an ongoing basis, Seidenberg admitted.
“We’d like to drive our steady spending at a slightly lower rate
if we can do that,” he said, pointing to the “mid-teens” as a
more palatable rate. “I don’t think the future of our company
is built on better, faster cheaper.”
Seidenberg consistently portrayed Verizon as a conservative
behemoth moving glacially forward that will have to live with
investor and customer expectations in a new communications
environment. To do that, it will “create a new model” and
become a “total communications company” working with both
internal and external resources.
“We see unlimited opportunities to grow vertically,” he
said. “Horizontally, there are lot of people in the world we
don’t serve.”
A possible vertical growth area could be the buyout of
Vodafone’s minority stake in Verizon Wireless.
“We always like to buy more of ourselves,” Seidenberg
admitted, before emphasizing that Vodafone has the final
say. “It’s not in our court; it’s in their court. They have the
option to put to us to leave.”
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