Verizon Wireless (NYSE:VZ) is talking to content owners about the possibility of delivering their content over its LTE multicast network, but the sticking point appears to be the business model. Speaking at the 2014 Bank of America Merrill Lynch Media Communications and Entertainment Conference, Verizon Communications CFO Fran Shammo said that the company is currently talking to content providers but that there is "lots of work to be done on that ecosystem."
Specifically, Shammo said the company is working with content owners to figure out alternative business models beyond the current one in which only consumers with linear TV subscriptions can authenticate their mobile device and get access to content. "Is it pay per view? Is it an advertising model?" Shammo asked. "We have to work that out."
LTE Multicast, which is Verizon's term for LTE Broadcast technology, uses evolved Multimedia Broadcast Multicast Service (eMBMS). Essentially, the technology enables the same content to be sent to a large number of subscribers at the same time, resulting in a more efficient use of network resources than each user requesting the same content and then having the content unicast to each user.
Verizon has been diligently working on its LTE multicast network, and by the end of September its multicast-network footprint will match that of its entire LTE network. "The brain will be in place," said Parissa Pandkhou, director of advanced services at Verizon Wireless, during an interview with FierceWireless last week at the Super Mobility show in Las Vegas. "We will be able to take select services areas and light it up."
But Pandkhou said that the big push for the service will come in 2015 when more devices are outfitted with the technology. During today's talk at the BofA/Merrill Lynch conference, Shammo echoed Pandkhou's remarks, saying that by the fourth quarter most of the new smartphones offered by Verizon will have the LTE broadcast chipset and that by second quarter 2015 there will be a "meaningful" number of subscribers with LTE broadcast-capable devices.
Shammo also noted that by the fourth quarter of this year, Nielsen, which monitors what content consumers are watching on their TV sets, will have the capability of doing the same for mobile devices. "That is an important part of the ecosystem," Shammo said.
Digital rights issues are another sticking point. Pandkhou said that, currently, mobile rights are often negotiated based upon the size of the screen and whether the device can also deliver voice service. She described mobile rights as being "low-hanging fruit" for many content owners.
Like Shammo, Pandkhou also said that figuring out the right business model for the delivery of content over LTE multicast is tricky. Besides advertising and pay-per-view, she said that the sponsored data model has some traction in certain situations. In that model, content owners would pay Verizon to deliver their content.
Of course, Verizon isn't the only wireless provider looking at LTE broadcast. AT&T (NYSE: T) has said it will most likely also deploy it sometime in 2015.
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