Wednesday, December 9, 2015

Can Verizon Transform Itself?

For decades, observers have argued about whether telcos could fundamentally transform themselves--and their businesses--for the Internet age, meet competitive challenges and protect or grow the value of their businesses. To be sure. that is a problem for any large enterprise.

But it is a challenge all tier one telcos must master, or else. And though many would agree most cable TV companies are more nimble than most telcos, both face similar structural issues (saturation and decline of core markets). So success in one industry segment offers at least some expectation that feat is repeatable.

As it no longer is possible to view Comcast as a “cable TV” company with a business model built on distribution services and communications access, so Verizon has made some efforts to shift its business model incrementally towards “over the top” services separated from Verizon’s access services.

Those Verizon initiatives include Hum, the vehicle communications service, and go90, the video entertainment service. Both are available to everyone, not just to Verizon mobile subscribers.

To be sure, neither contributes a significant portion of Verizon revenue.

So it is hard to say, yet, whether Verizon will be able, over time, to significantly diversify its revenue sources away from “captive” access and distribution services, and towards over the top apps. Few seem to question the strategy; more might worry about execution.

But Verizon is going to try. "We are disrupting ourselves," said Lowell McAdams, Verizon CEO. "We think of ourselves as a technology company with solid telecom assets."

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