Feature Article

September 23, 2014

Verizon CEO Mulls Mobile OTT for Mid-2015

Verizon Communications is mulling an own over-the-top (OTT) service, integrated with Verizon Wireless network services, to launch in the middle of 2015.

That’s the word from CEO Lowell McAdam, who said that Verizon has everything in place to offer its own OTT service — presumably to replace or complement the existing RedBox-Verizon OTT joint service — and that the telco is in the latter stages of negotiations with the major content providers ahead of the launch (that would presumably be Disney, NBCUniversal, Viacom, FOX, Time Warner and so on).

"I think over-the-top video is right around the corner," McAdam said at the recent Goldman Sachs investor conference. "We've got the assets in place, and I don't feel we need an awful lot more."

He added, “We are very focused on probably late first half of 2015 having products like these in the marketplace.”

Verizon's buy earlier this year of Intel's OnCue digital video assets will support the launch, which will likely combine the telco’s FiOS IPTV and broadband offering with its mobile assets. The company’s LTE footprint and AWS spectrum will be critical in supporting an OTT launch, he said. But, the backroom infrastructure is important as well.

To that end, “we have been investing in our Verizon Digital Media Service, which is that content delivery network gives you the ability to insert ads and deliver to any kind of device that’s up and running very strongly for us.”

And the initial gut instinct is to create a service that would be authenticated off of a subscriber’s existing home service, making it less of an OTT play and more of a TV everywhere initiative or a broadband sweetener. But, that’s somewhat old-school thinking at this point, he seemed to intimate.

“We understand there needs to be some smooth transition here. But I don’t think there is any one that would stand up here and say the only way it’s going to be offered five years from now is linear and it’s going to be tied to your TV set, because frankly they will miss the market and they will be the ones left behind,” he said.

McAdam also admitted that the younger generation of Millennials likely wants something that’s more of a pure-play OTT service. To that end, the telco’s thinking “has moved from almost a stiff arm to much more of an embrace,” of pure-play OTT video for smartphones and tablets. “And I can tell you a month doesn’t go by that we are not sitting down at my level having decisions about how do we make that model win-win and there is no doubt in my mind that we can make it a win-win. We can address those markets very effectively as we go forward.”

He noted that content will be important in targeting at younger viewers, with selections like DreamWorks Animation's AwesomenessTV, combining a range of on-demand content and live channels.

Speaking of content, he also addressed the possibility of using a mobile play as an incubator for an a la carte TV service. “No one wants to have 300 channels on your wireless device,” said McAdam. “And I think everyone understands. It will go to a la carte. The question is what is that transition looks like, and as I said, we’re dedicated to making this a win-win for the mobile carriers as well as the content providers.”

A hybrid offering that allowed for personalization could bring all of Verizon’s assets to bear, he said:

“So if you look at it over-the-top, I think you could end up with a bundle that will have a major broadcast content providers, and we would use our network around multicast to handle that very efficiently,” he noted. “And then you’d have a lot of these custom channels that people can do via video on demand, and the IPTV can be much more interactive. Those would be the unicast offering, and we could handle that efficiently as well.”

Edited by Maurice Nagle

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