Verizon Communications might have reached a key inflection point: the time when coping with declining voice lines no longer is among the top sales challenges facing Verizon executives.
In fact, Verizon CEO Ivan Seidenberg says he no longer is looking for the inflection point, the New York Times reports. “I don't care about that any more," he says. "I am going to focus on driving FiOS penetration and taking costs out.”
In fact, in a statement that might still have the power to shock some observers, Seidenberg says video, not voice, will be the core product bought over the FiOS fiber to the home network.
Randall Stephenson, AT&T CEO, and Ed Mueller, Qwest Communications CEO, also now are emphasizing that there is a point where landline losses would stop.
That doesn't mean, in Verizon's case, that there will be no more line losses from this point forward. In fact, that actual inflection point is nearing, but has not yet been reached.
The inflection point now is one of business philosophy and focus, the realization that more is to be gained by growing new businesses aggressively, and using the new platform to reduce legacy costs, rather than focusing on wired voice losses.
But neither would it be correct simply to dismiss the notion that there is a time coming when traditional telcos will stop losing voice lines.
To be sure, it is a huge change in mindset for a business which has seen voice line losses for nine straight years, beginning in 2000. But it always has been clear those losses would stabilize and then possibly even reverse as competitors reached some natural limit.
Nobody with any industry experience ever has argued that cable companies, for example, would take more than a fraction, though a sizable fraction of wired voice lines, for example.
And as ultimately most lines in service will be broadband lines, the notion of what a wired access line is, always has been expected to change as well. To the extent that broadband access is the replacement service for wireline voice, while VoIP is an application running over those lines, "voice line loss" will stop in a literal--as well as figurative--sense.
The "line" will be the broadband connection. On top of that will run many revenue-generating services, voice and video among them.
Given the right balance of features and price, consumers will continue to buy wired voice services, new surveys are starting to suggest.
Harris Interactive, for example, recently found that up to 70 percent of consumers would keep using their landline voice services if integrated with their mobiles in some ways. Users very much want the ability to start a mobile conversation using their in-home Wi-Fi networks and keep the connection when leaving the house, and keeping a conversation going--but switching to the Wi-Fi network, when entering the house.
Seidenberg says that with TV, the PC and the Internet converging, the carrier’s future would be in selling video services, such as interactive TV, bundled with wireless voice. And Seidenberg's vision of the future clearly includes content services to "all three screens": television, PC and mobile device.
Like leading cable companies, which "cluster" in major markets, Verizon also has made a strategic decision to concentrate on higher-density urban and suburban markets, spinning off or selling rural systems without the density to support fiber to the home networks.
Aside from allowing Verizon to execute on its new strategy, divesting rural assets also allows the company, which is nearing the end of its fiber upgrade process, to trim its capital spending.
Seidenberg also says his job now is to get Verizon Communications focused on the idea that it is going to be a video-focused company providing content and software on three screens.
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