Tuesday, December 7, 2010

Verizon Sees 4G as Substitute for Premium Home Services

Verizon Communications Chief Executive Officer Ivan Seidenberg said its next-generation wireless network could become a "modest substitute" for other home-entertainment services such as traditional cable or Internet access.

Seidenberg, speaking from the experience of the U.S. telco industry, says the first reaction an industry's executives have to the notion that demand for their most-important legacy product is declining, is "denial." Sooner or later the trend becomes clear enough, though.

That there is little conclusive evidence about video cord cutting so far, it will manifest itself eventually, he thinks. While relatively newer technology such as wireless access is initially additive, it eventually starts to cut into discretionary spending for other services, particularly premium ones.

In fact, one might argue that Netflix streaming and DVD rental services clearly have cannibalized "premium cable" services such as Home Box Office, Starz or Showtime. Eventually, Seidenberg believes, that will extend more directly to traditional "basic cable" services as well.

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