Shammo: No comment on Comcast-TWC, FiOS plans on track

Given the opportunity to come down favoring or opposing Comcast's (NASDAQ: CMCSA) bid for Time Warner Cable (NYSE: TWC), Verizon (NYSE: VZ) CFO Fran Shammo stood firmly in the middle.

Fran Shammo, Verizon

Shammo

"We don't really publicly state for or against anything," Shammo told an early morning Miami audience at Jefferies 2014 Global Technology, Media and Telecom Conference. "We compete with Comcast today; we compete with Time Warner Cable today. One replaces the other (and) we compete with each other."

The way that competition takes place, at least with FiOS, could be changing as Verizon increasingly moves away from a linear TV model into something more flexible, Shammo said.

"I'm more intrigued with the multicast technology that's coming on wireless which will in essence enable us to give you 24-hour programming extremely efficiently in the wireless network," Shammo said. "I think that sports, news, concerts, those types of things that people want to view real-time will be an ecosystem that can be created around content that doesn't disrupt or affect the linear TV model."

Shammo suggested that these ecosystem changes will occur "over the next 12 months to 24 months."

By then Verizon will have already made its next big FiOS move: going all-IP with a video server and removing the need for set-top boxes. That's expected to happen by the middle of this year, Shammo said, with Verizon driving entire residential services over IP.

"The real benefit for the customer is that you have one piece of equipment in your home," he said.

The other benefit to Verizon, of course, is reduced installation time and reduced CPE costs.

"All I have to do is connect that media server up to our ONT, light it up, get the IP technology in the home working and we believe it cuts our install time by about 50 percent," he said.

Which is great for those who are in markets that can get FiOS; not so good for those looking in from the outside with FiOS envy. That's a situation that's not going to change … ever.

"We'll continue to fulfill our FiOS LFAs (license franchise agreements). We will complete (the FiOS buildout) with about 19 million homes passed. That will cover about 70 percent of our legacy footprint; 30 percent we're not going to cover," he said.

That 30 percent will continue to be served by legacy copper networks.

"We will continue to harvest that copper network and those customers and keep them as long as we can but we will not be building FiOS out to those areas," Shammo said.

There has been some concern that this strategy is stifling FiOS growth--especially after Verizon reported very low FiOS TV and broadband additions in the first quarter. That's not the case, Shammo said, blaming a "harsh winter" in the Northeast as a reason for install slow-downs.

"Coming out of that quarter I saw positive things when the weather broke," Shammo said. "I think the second quarter will be a better quarter for us."

Then, too, there are only so many subscribers to be added in some markets, he cautioned.

"Some of our markets are at 40 percent penetration; we have markets at 50 percent penetration. Those markets will slow," he conceded.

On the other hand, there are markets like New York where "there's still a lot of room for growth in the FiOS area."

Related articles:
Netflix cuts deal to pay Verizon for direct access
New Jersey regulators: Verizon can use DSL, wireless to deliver broadband to rural areas
Verizon adds 57,000 FiOS video, 98,000 Internet subs in first quarter

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