Verizon reworks the corporate jigsaw puzzle in the name of 5G

Verizon has unveiled a new corporate structure in an attempt to make a lean, mean, money-making machine at the dawn of the 5G era.

While many of these announcements are usually coupled with some form of job cuts, there doesn’t seem to be one in this case. We’ve been unable to locate the relevant forms on the Securities and Exchanges Commission website, though considering there have been numerous ‘streamlining’ initiatives already announced, it might be a case of fitting the business around the new headcount.

“This new structure reflects a clear strategy that starts with Verizon customers,” said CEO Hans Vestberg. “We’re building on our network transformation efforts and the Intelligent Edge architecture to deliver new customer experiences and optimize the growth opportunities we see as leaders in the 5G era. We’re focused on how our technology can benefit customers’ lives and society at large.”

The new Verizon business will be organized into three business functions (Consumer, business and Media), supported by a network and IT organization, and corporate-wide staff functions. The consumer group will feature both the wireless and the broadband business units, as well as wireless wholesale, led by Ronan Dunne, who is currently President of Verizon Wireless. The business unit will include the wireless and wireline enterprise, small and medium business, and government businesses, as well as wireline wholesale and Verizon Connect, the company’s telematics business, headed up by Tami Erwin, the current EVP of Wireless Operations. The media unit will essentially be the Oath business, with current CEO Guru Gowrappan in charge. Kyle Malady will lead the network and technology department, while there will no changes to the management team on the corporate side.

While job losses have been an unavoidable topic in the telco world over the last couple of years, Verizon made a pretty weighty announcement last month. In an effort to trim the number of lifers and dead-weight in the management layer, Verizon offered 44,000 staff a redundancy package of three weeks of severance pay for every year worked, though it is not entirely clear how many heads the telco want to count rolling out the front door.

As it stands, Verizon currently employs 153,000 people across its various markets, though this figure was as high as 183,400 in 2012. What is worth noting is that it would be unfair to point the finger of destruction at Verizon alone, the trend is clearly visible across an industry rocked by OTTs, and a North American market which has consistently and aggressively sought to undercut rivals.

With many telcos around the world attempting to take advantage of the convergence trend, perhaps this new structure will offer Verizon a leg-up. The launch of its 5G fixed wireless access business certainly gives the business something to talk about, though with both the consumer wireless and broadband units now on the same branch of the family tree, a more consolidated approach on products, tariffs and marketing can be taken. How this impacts the Verizon message remains to be seen, though an aggressive 5G assault is almost guaranteed with new devices promised over the next 12 months.

Research from RepeaterStore suggests only 41% of US consumers were aware 5G is just around the corner, and while the conversation for many telcos is now focusing on the enterprise side, in the US the 5G p*ssing contest appears to be circling the consumer. With such low consumer knowledge of 5G, the telcos will have to do a considerable marketing push to communicate the benefits of 5G.

Verizon might have launched 5G, but new iPhone pulls subscribers

Verizon published Q3 results, beating market estimates on earnings and subscriber adds.

Verizon published Q3 results today, narrowly beating market expectations. On the wireless side, Verizon Wireless added 510,000 net postpaid smartphone subscribers, with the postpaid churn rate at 0.8%. The strong marketing activities following the launch of the new iPhone, including an offer of up to $750 off new models, has helped attract new subscribers. As an important operation landmark right at the end of Q3, Verizon launched fixed wireless access service on 5G in four cities, therefore could claim to be the first to offer 5G in the country.

“Verizon has posted a third quarter of strong operational and financial performance,” said CEO Hans Vestberg. “With the beginning of the 5G era in this fourth quarter, we expect that trend to continue. We are investing in networks, creating platforms to add value for customers and maintaining a focused, disciplined strategy. Verizon is best positioned to take full advantage of the opportunities offered by the new game-changing generation of technology.”

On the broadband and TV side, Verizon’s Fios gained 54,000 new internet users, slower than the 66,000 it gained the same period last year, and lost 63,000 cable TV subscribers, faster than the 18,000 it lost last year, another indication that the cord-cutting trend shows no sign of abating.

Verizon Wireless continued to make the largest financial contribution. It generated $23 billion revenue (70.5% of group total) and brought in $11 billion EBITDA (90% of group total). The wireline business’ total revenues went down by 3.7% to $7.4 billion. The consumer side of the wireline business largely held at $3.1 billion (-2.1% year on year), with the corporate business dropped by over 5%.

On the group level, the total revenues of $32.6 billion, up 2.8% from last year, beating market expectation by $110 million, with non-GAAP earnings per share of $1.22, beating expectations by $0.03. GAAP EPS of $1.19 was right in line with market expectations.

Like most telecom operators, Verizon is a mature business that does not often disappoint but seldom excites. The management guidance pointed to low-to-mid single-digit percentage of full-year consolidated revenue growth and low single-digit percentage growth in EPS, which makes us pay some attention to another area of interest, Oath, the Media & IoT business mainly comprised of AOL and Yahoo.

If Verizon was to bank on this division to herald its future growth then it might be disappointed. Total revenues went down from $2 billion a year ago to $1.8 billion. More importantly, Verizon does not expect Oath to hit the $10 billion revenue target it set for the division earlier.

Verizon’s share price gained by 1.4% in pre-market trading.

5G becomes real as Verizon launches FWA offering in four cities

It might not have been the blockbuster moment the industry has been building towards, but the dawn has broken on the 5G era.

Just to put that statement into perspective, this is a small launch, a handful of pockets in four US cities, and only available as a wireless broadband offering for the home right now. If you happen to be one of the few Americans living in the right area and fancy cutting the cord on your broadband connectivity, Verizon is up your street promising ‘typical speeds’ of 300 Mbps, and peaks of 940 Mbps. Houston, Indianapolis, and Los Angeles will be receiving the 5G treatment, with Sacramento gaining special attention.

“We were able to make Sacramento one of our first 5G cities because Mayor Darrell Steinberg and city leaders embraced innovation and developed a strategic vision for how 5G could be a platform for the larger Sacramento technology ecosystem,” said Jonathan LeCompte, Pacific Market President for Verizon. “We believe this vision will pay off big for the city, attracting new investment, businesses and next generation services for residents.”

Sacramento has seemingly been the most proactive of partners for Verizon, with the city hoping 5G can spur investment and growth in a variety of different industries, autonomous vehicles for instance, with the city recently announcing a partnership with Phantom Auto to prepare infrastructure to support teleoperation safety technology for driverless vehicles. Over the last 12 months, Verizon has installed small cells on more than 200 utilities poles and street lights.

“This is a significant day in Sacramento,” said Mayor Darrell Steinberg. “When cities like ours partner with innovative businesses, investment follows. Not only has Verizon invested heavily to bring the latest network technology to our city, but they are partnering with us to focus investments on equity and economic opportunity for all neighbourhoods.”

While it is only available in a very, very small number of locations, it is a promising start. Those who signed up to be the first to receive the surface will be rewarded with a three-month free trial period before paying $70 a month (or $50 a month for existing Verizon customers) and the promise of no data caps. These customers will also receive a free Apple TV 4K or Google Chromecast Ultra device at installation.

Irrelevant to the size of the launch, Verizon now has the bragging rights of being the first in the US to deliver 5G to customers. Competitors will argue this is not the promised 5G experience, and no-one will be able to deliver the 5G bonanza until compatible mobile devices hit the market next year, but that is beside the point. Verizon can now run as many in-your-face adverts as it wants, boasting about beating all the other telcos in the world in delivering 5G to the consumer. It’s a nuance, but it is not incorrect.

Verizon to launch ‘world’s first commercial 5G service’ on 1 October

US operator Verizon is using the limited launch of a new fixed wireless access service to claim victory in the 5G race.

Verizon 5G Home is more fully described as ‘the world’s first commercial 5G broadband internet service,. It will be made available in parts of LA, Sacramento, Indianapolis and Houston 1 October, presumably targeted at people whose fixed broadband is sufficiently rubbish for them to give FWA over millimetre wave a go.

5G is already the most over-hyped thing since the Y2K bug so Verizon seems to have decided to just ride the wave. Of course 5G for most people is a mobile (as opposed to fixed) technology, but that’s not going to stop Verizon’s marketing department. On top of yet another ‘first’ claim, Verizon gets to bang on about the infrastructure that makes it possible.

“To deliver the full potential of 5G, a wireless network provider must have three fundamental assets: deep fibre resources, a large deployment of small cells and critical spectrum holdings – that’s Ultra Wideband,” said Kyle Malady, Verizon’s CTO.  “We will deliver a revolutionary 5G experience that will change how people live, work and play.” Sounds more like an 80s Mars advert, but there you go.

“5G is here,” said Verizon CEO Hans Vestberg. “To be first, we encouraged others in the ecosystem to move more quickly at every step. We appreciate the partnership of network equipment makers, device manufacturers, software developers and chip makers in reaching this critical milestone. The entire wireless industry gets to celebrate.”

We’ll see about that Hans. MWC Americas, which starts today, is set to be an orgy of competing 5G firsts and who’s to say that might not get a bit heated as attendees spill out into the LA bars. But credit where it’s due, this does seem to be the first commercial service using some kind of 5G tech, so Verizon is entitled to crow. Enjoy it while it lasts.

AT&T and Verizon compete for yet more 5G ‘firsts’

US carriers AT&T and Verizon have completed what they both claim to be the world’s first data transfer to a smartphone form factor device over mmWave 5G live networks.

If we put together all the 5G ‘firsts’ claimed by the industry players it would make a long read, especially if we included cases where similar firsts have been claimed by different companies. In this most recent case, both AT&T and Verizon called themselves the world’s first to successfully transfer data over live 5G networks to purpose-built mobile devices, in Texas and Minnesota respectively.

Temporally, AT&T might have stolen a step ahead of its competitor. The AT&T test took place “over the weekend”, while news coming out of Verizon on Monday declared the success happened yesterday, but they were essentially the same kind of tests. Probably the most intriguing part of the story is that both carriers used Qualcomm’s terminals on networks supplied by Ericsson.

Even the technical details disclosed look very similar. Both tests were using smartphone form factor test devices from Qualcomm integrating the latter’s Snapdragon X50 5G modem and RF subsystem (see the picture), both were going through Ericsson 5G-NR capable radios connected to 3x virtual core networks.

These announcements followed hot on the heels of a couple of other 5G firsts in the last few days: last week Verizon and Nokia claimed to have completed the first over-the-air data transmission on a commercial 5G NR network in Washington DC, though the receiving end was not exactly a smartphone-like device. On Monday Nokia announced its demo with Sprint to conduct the first (in the US though) 5G NR connection over Massive MIMO.

Ericsson and Qualcomm claimed to have completed the first 5G NR ‘call’ to a smartphone-like device (which was pretty similar to the ones used in the AT&T and Verizon tests). That announcement itself came a couple of days after Ericsson announced another similar test with Intel. These two slightly earlier tests were conducted in lab environment while the latest AT&T and Verizon cases were done over live networks, or as AT&T emphatically stressed, “Not a lab. Not preproduction hardware. Not emulators.”

We understand the marketing departments of these companies must be busy generating as big a buzz as possible in the run-up to the Mobile World Congress America (starting tomorrow). Meanwhile we cannot discount that tests and announcements (and claims) like these do show the wider world 5G potentials when the commercial networks roll out in the coming months and years, though at the moment all these firsts still do not mean anything for consumers as no 5G terminals are available yet.

Another interesting angle to look at these tests is how active the US carriers are in pushing ahead 5G on mmWave, which contrast with how slow the European operators and regulators are moving. The European Commission launched a project to look into the feasibility of using mmWave for 5G deployment in the EU. A reporting session was organised in Brussels in June this year. The views were divided, and conclusions elusive. The main doubt from the industry looked to be the lack of compelling business case and the wrangling between the telecom industry and the satellite industry on the utilisation of the lower mmWave spectrum, hence the lack of contiguous bands for 5G buildout.

It may be a worthy reminder that we can never tell with full confidence what new technologies can do. Andre Fuetsch, AT&T Communications’ CTO was bang on when he said “… yet to be discovered experiences will grow up on tomorrow’s 5G networks. Much like 4G introduced the world to the gig economy, mobile 5G will jumpstart the next wave of unforeseen innovation.”

Oath boss reportedly edging towards the exit

Tim Armstrong, the boss of Verizon’s media unit Oath, is reportedly discussing terms to exit the business.

The reasons behind the move are unclear for the moment, though, according to the Wall Street Journal, there have been internal disagreements on how to best utilise Verizon’s lofty position in the wireless world to aid the growth of Oath. What does seem to be a frustrating couple of years might be coming to a close for the man who spearheaded Verizon’s efforts to capture digital advertising revenues.

Armstrong entered the Verizon stronghold as a result of the telcos acquisition of AOL, where he was CEO, and since has overseen the merging of AOL and Yahoo to its current Oath livery. What was supposed to be a challenge to the Facebook and Google dominance of advertising revenues in North America has whimpered, with seemingly very little progress being made.

Over the first six month of 2018, Oath contributed roughly $4 billion to the Verizon coffers compared to the $44 billion generated by the wireless unit. According to data from eMarketer, Google accounts for 36.3% of the digital advertising revenues in North America, while Facebook collects 19.3%. Oath collects 2.7% in comparison.

One of the difficulties for the business seems to be a disagreement between Verizon and Oath executives on how to best monetize subscriber data. Sources have suggested Oath employees believe those in the wireless business are being too conservative when it comes to using the data to cross pollinate opportunities for the content and media business. Although there is an opportunity to make cash, the wireless executives are apparently worried about whether such activities would lead to increased churn.

This might well be the case, though some might wonder whether this point was raised prior to Verizon spending $9 billion on acquiring content businesses. The money changing hands is certainly not chump change, and it would be extremely worrying to think these purchases were made without thinking through the practicalities of how a media business would work.

At the time of writing, Verizon has refused to comment on the situation. The fact it has not outright denied the talks suggests there is an element of truth. Perhaps Armstrong is simply tired of dealing with incredibly risk-adverse executives, a perfect stereotype of the telco industry, and is keen to get back into the more adventurous media space.

Ronan Dunne said to be in the running for the BT CEO gig

Current Verizon exec and former O2 UK boss Ronan Dunne is reported to be one of the people BT is considering to replace Gavin Patterson.

The rumour comes courtesy of the Telegraph, which has sources that claim Dunne was recently over here to speak to BT about the opportunity. That’s about it as far as the Telegraph story goes – no comment from either Dunne or BT and it could just be blind speculation. But it is also plausible as Dunne has a lot of relevant experience and could be keen on the opportunity having missed out on the top job at Verizon and an apparent sense of unfinished business in the UK.

Current BT CEO Gavin Patterson decided to throw in the towel earlier this year following a bunch of negative events afflicting BT under his tenure. It looks like a pretty exasperating gig, not least due to the tightrope the former state monopoly has to walk with regulators. Dunne’s move to Verizon seemed to be prompted by his own negative regulatory experiences following the blocking of O2’s merger with Three UK, but maybe a couple of years away has renewed his appetite for the fight.

Among the other frontrunners for the top job at BT are current consumer boss Marc Allera and various other BT senior execs as well as anyone else a headhunter might find when the Goole ‘UK telecoms CEO’. Informa’s Stephen Carter has apparently distanced himself from the position without entirely ruling it out and they could just stick the head of another utility in if they wanted to play safe.

Nokia and Verizon claim another 5G first

Nokia and Verizon has teamed up to congratulate themselves on achieving another 5G first; the first successful transmission of a 3GPP New Radio (NR) 5G signal to a receiver situated in a moving vehicle.

With the self-imposed deadlines for launching 5G services edging ever closer, Verizon has completed another incremental step in making the bufferless cat video world a reality. With two antennas set up in Nokia’s New Jersey campus, Verizon whizzed past the building with receiver and measurement equipment in the boot of a Ford KA (maybe, maybe not) and managed to successfully hand off the signal from one radio sector to the other, on 28 GHz spectrum.

“Unlike some of the incremental 5G technology announcements we’ve seen lately, tests like the one we conducted are significant advancements in the development of 5G technology,” said Bill Stone, VP of Technology Development and Planning for Verizon. “By taking these tests out of the lab and into the field, we’re replicating the experience users will ultimately have in a 5G mobility environment.”

“We are pleased to showcase the acceleration of the mobile capabilities in 5G,” said Marc Rouanne, President of Mobile Networks at Nokia. “Enhanced mobile broadband is one of the first services being delivered on Nokia’s end-to-end 5G Future X portfolio. As a result, we can help our customers meet their early 5G deployment schedules and initial coverage demands.”

It might not seem like the most exciting of tests, unless Carly Rae Jepson was on the radio, but these incremental steps are important. The last thing anyone needs is to be driving from Boston to New York, cream cheese bagel in hand, only for your passenger to fly into a fit of rage because the video of a panda farting didn’t work properly.

Next week the dynamic duo will be testing whether it is possible to tweet Elton John while climbing the stairs to the third floor as the lift is broken.

Rural wireless group calls bullsh*t on Verizon coverage claims

The Rural Wireless Association (RWA) has filed a request with the FCC asking the watchdog to investigate Verizon’s 4G coverage claims, sniffing out some creative communications from the telco.

The filing itself requests the FCC investigate the 4G LTE coverage claimed by Verizon and require re-filing of the company’s data to correct what the RWA believe is overstated coverage. The request comes off the back of an investigation launched by a coalition of radio frequency engineering firms, which believes Verizon’s claimed 4G LTE coverage is grossly overstated.

“Commission review of Verizon’s claimed coverage is critical,” said RWA General Counsel Carri Bennet. “Our participating small rural carrier members estimate that it will cost them each $1 million dollars or more to complete the challenge process – a figure that could be dramatically reduced and used for deployment of rural broadband services if Verizon’s reported coverage was accurate.”

While we in the UK might complain about not being able to download cat videos at lightning speed while strolling the beautiful, dramatic and unrivalled Welsh countryside, our pains seem minimal in comparison to some regions of the US. Such is the vast scale of the country, the digital divide between rural and urban environment isn’t even the same conversation.

The farmers and trekkers might not be the most commercially attractive customers to US telcos, but it has become somewhat of a political issue in recent years. Equality is a US principle, therefore the telcos have to give as much attention to corn as concrete, and should you believe the press releases, they certainly do. This is where this filing could be an issue for Verizon; it could turn into political embarrassment with the telco undermining politicians who are claiming the digital divide is a priority.

Another issue is down to funding. The Mobility Fund Phase II (MFII) funding is an initiative which provides cash injections for smaller, regionalised telcos assistance in covering not-spots. Should Verizon have overstated its 4G coverage, covering up not-spots, the FCC would be less inclined to support the smaller telcos in these regions with additional funding.

As part of the investigation, Panhandle Telephone challenged the claim Verizon covers almost all of the 14,778.47 square kilometre Oklahoma Panhandle area. Using information which is available to the general public, as well as the aid of a newer modelling tool and the FCC-adopted 5 Mbps downlink standard, Panhandle Telephone claims Verizon in reality covers less than 50% of the area.

An investigation by the FCC could be an embarrassing episode for Verizon, though it could snowball into a PR disaster. If claims are found to be true, the telco isn’t just embarrassing politicians or ignoring farmers, it is a multi-billion dollar heavyweight stealing money from the pockets of minnows in the industry, a segment which is apparently the foundation of the US economy.

US operators Q2 2018: Verizon does a bit better than AT&T

Both giant US operators announced their Q2 2018 numbers recently with Verizon exceeding expectations but AT&T not so much.

Verizon managed higher revenues and profits than analysts were expecting and also beat expectations with 398,000 postpaid smartphone net adds. AT&T’s revenues, meanwhile, were a bit below what the street anticipated, but earnings per share were better so it’s swings and roundabouts at the end of the day, or something like that.

“Verizon is extremely well-positioned for the future,” said soon-to-be-replaced Verizon CEO Lowell McAdam. “Our financial and operating results for the first half of 2018 were strong, as evidenced by service revenue, earnings and operating cash flow growth delivered in a highly competitive marketplace.”

“It was an exciting quarter for AT&T as we completed the acquisition of Time Warner on June 14 and created a modern media company built around premium content, 170 million direct-to-customer relationships, advertising technology and high-speed networks,” said Randall Stephenson, AT&T CEO.

“Time Warner joins us coming off an impressive second-quarter. Turner turned in solid subscription and advertising revenue growth, Warner Bros. is in high gear with a record number of series in production, and HBO delivered strong subscriber revenue growth.

“Since we closed the Time Warner deal, we’ve also announced an agreement to acquire ad-tech leader AppNexus, which will be an important step to strengthen our leadership in advanced TV advertising. Our goal is to reshape the way media and entertainment work for consumers, and you will see us continue to do exactly that.”

The respective shares prices initially went in opposite directions, with Verizon up and AT&T down, but then everyone seemed to take the numbers with a pinch of salt and there was not a lot to choose between them at time of writing. McAdam had some stuff to say about the merits of being a major content owner on the analyst call, which Light Reading reported on. Here are the financial tables if you’re into that sort of thing.

Verizon

Verizon Q2 2018

AT&T

AT&T Q2 2018