Say Goodbye To Your Margins: What Google Fi Means For Verizon
Cameron Graham • 73 Comments
Cameron Graham • 73 Comments
Jan. 31, 2015, 1:47 PM
- After learning which way AT&T (NYSE:T) went (high) and which way Verizon Wireless (NYSE:VZ) went (low) in the 11-week FCC wireless spectrum auction, most attention focused on Dish Network (NASDAQ:DISH): What are they up to?
- The satellite firm took just short of half of the available licenses (and saved over $3B by cannily working through small-business partners) but doesn't offer mobile service -- yet.
- Dish's fortunes in this auction were linked to those of Verizon, which is widely considered a potential buyer or lessee of Dish's spectrum assets. But Dish's Charlie Ergen has pursued wireless firms before (MetroPCS and Sprint (NYSE:S)) and may see wireless mobile as the next path forward from a slower-growing business.
- “I think [Ergen's] strategy is built around a confidence that spectrum will only become more valuable going forward,” says former FCC commissioner Robert McDowell.
- DISH closed the day out down 4.3%, slightly below where it was sitting before the auction results were released.
Jan. 30, 2015, 5:46 PM
- In non-auction FCC news, the agency will add rules that let it review terms for the Internet service interconnects that govern deals between providers and heavy bandwidth eaters -- particularly including Netflix (NASDAQ:NFLX).
- The move is a first blush of net-neutrality regulations to come.
- Producers like Netflix, Amazon.com and YouTube would prefer a ban on interconnect fees, while service providers (CMCSA, T, VZ) are arguing for no limit on negotiated fees.
- The rules are set for a Feb. 26 vote.
Jan. 30, 2015, 1:14 PM
- Heavy volatility for Dish Network (NASDAQ:DISH), which has fluctuated from down 6.5% to its earlier -3.3%, following details of major bidder amounts in the FCC's record wireless spectrum auction.
- Dish reportedly bid $10B and their participation was heavily scrutinized -- especially for what it might mean, whether Dish was bidding to add spectrum or just push prices for rivals.
- The company was also tied to Verizon (NYSE:VZ), who might have an interest in Dish's existing similar spectrum assets, depending on its bidding here. The relatively lower spending by Verizon might mean hidden value in Dish's spectrum if Verizon takes an interest.
- Others: (T +0.8%); (VZ); (TMUS +0.4%)
Jan. 30, 2015, 1:06 PM| Jan. 30, 2015, 1:06 PM | 4 Comments
Jan. 30, 2015, 2:04 AM
- Cablevision (NYSE:CVC) is suing Verizon (NYSE:VZ), accusing the company of falsely advertising the "fastest WiFi available".
- The complaint filed states that Verizon has been installing new network routers for up to $199.99, despite knowing that Cablevision offers the same routers for its Optimum network, free of charge.
- Cablevision also called the advertising an effort to stymie its launch of "Freewheel", a WiFi voice, text and data service, that could cut into Verizon's sales.
Jan. 29, 2015, 1:04 PM
- Par for the course in what has become intense competition in wireless telecom, the FCC's latest spectrum auction (AWS-3) received record bids of $44.9B in 341 rounds that started Nov. 13.
- Expectations were that the total might come between $10B-$20B, above the $10B reserve price. Only a very few investors thought the sale might top $35B.
- Paired spectrum licenses -- those focused on major metro areas, and without government users that must be moved off first -- got the big bids.
- Analysts anticipated that AT&T (NYSE:T) may have been spending more than Verizon Wireless (NYSE:VZ) -- upward of $20B -- as news came that AT&T entered into $11B in credit pacts.
- The high total also means multiple bidders aside from AT&T and Verizon likely fought hard for licenses in major metros including New York and Los Angeles. Sprint (NYSE:S) didn't take part, though Dish Network (NASDAQ:DISH) did.
- Winners will be released by the FCC within days.
Jan. 26, 2015, 1:57 AM
- Not only is Google (NASDAQ:GOOG) preparing a new cellphone service that will dial up pressure on the wireless industry’s business model, Cablevision (NYSE:CVC) is also prepping one.
- Google’s new package will hunt through cellular connections provided by Sprint (NYSE:S) and T-Mobile (NYSE:TMUS) and WiFi "hot spots," picking whichever offers the best signal to route calls, texts and data, WSJ reports.
- Meanwhile, Cablevision will start offering Freewheel next month, a WiFi-only mobile-phone service.
- Such services pose a challenge to traditional telecom carriers, including AT&T (NYSE:T) and Verizon (NYSE:VZ).
- Previously: Report: Google to sell phone plans via Sprint, T-Mobile (Jan. 21 2015)
- Previously: Analysis: Cable WiFi services to go mainstream (Oct. 06 2014)
Jan. 22, 2015, 9:47 AM
- Verizon (VZ -1.7%) added 2.1M net retail wireless connections in Q4, of which 2M were postpaid (672K postpaid phones). That's up from 1.7M and 1.6M a year ago, and indicates Big Red continues to hold its own competitively in the fact of T-Mobile/Sprint's aggressive promotions. Prepaid net adds totaled 86K, and the wireless retail base stood at 108.2M (102.1M postpaid) at quarter's end.
- On the other hand, Verizon's own promos led wireless service revenue growth to fall to 2.8% Y/Y (to $18.2B) from Q3's 4.8%, Q2's 5.9%, and 7.5% in Q1. And a 74.4% increase in equipment revenue (thanks to phone upgrade plans and the iPhone 6) led wireless op. margin and EBITDA margin to fall to 23.5% and 42% from 29.5% and 47% a year ago. Retail postpaid churn jumped to 1.14% from 1% in Q3 and 0.96% a year ago.
- Wireline revenue fell 1.6% to $9.6B, with a 4.1% increase in consumer retail revenue (lifted by FiOS) offset by 3.7%, 4.6%, and 5.8% drops in small business, enterprise, and wholesale revenue. Wireline op. margin and EBITDA margin rose to 4.4% and 23.9% from 1.2% and 22.5% a year ago.
- 145K FiOS Internet and 115K FiOS TV subs were added, bringing the respective bases to 6.6M and 5.6M. Wireline voice connections fell by 6.1% Y/Y to 19.8M.
- Verizon is guiding for "at least 4%" 2015 revenue growth, above a 2.6% consensus. Adjusted EBITDA margin is expected to be "consistent" with 2014 levels. While AT&T is cutting capex in 2015, Verizon plans to slightly increase capex to $17.5B-$18B from 2014's $17.2B.
- Verizon says it has 15M Internet of Things (IoT) connections. BTIG's Walter Piecyk observes 1.7M tablets were sold, average data usage for More Everything accounts rose 50% Y/Y, and wireless EBITDA fell for the first time since 2011 (when the iPhone 4S launched).
- Q4 results, PR
Jan. 22, 2015, 7:02 AM
- Verizon (NYSE:VZ): Q4 EPS of $0.71 misses by $0.02.
- Revenue of $33.2B (+6.9% Y/Y) beats by $530M.
- Shares +0.48% PM.
Jan. 21, 2015, 5:30 PM
Jan. 21, 2015, 4:09 PM
- Two day after reporting on Google's (GOOG +2.2%) SpaceX investment (confirmed a day later), The Information reports Google (GOOG +2.2%) is getting ready to "sell mobile phone plans directly to customers and manage their calls and mobile data over a cellular network."
- Google won't be building its own network, but will instead operate as an MVNO leveraging Sprint (S +5.8%) and T-Mobile's (TMUS +1.9%) networks. Deals for wholesale network access are reportedly on the way. Sprint and (to a lesser extent) T-Mobile have caught a bid on the report.
- Becoming a U.S. mobile carrier with Sprint/T-Mobile's help risks upsetting AT&T (NYSE:T) and Verizon (NYSE:VZ), who still tower over the local telecom landscape. However, it also gives Google a chance to experiment with novel/low-cost service plans, perhaps with the hope that other carriers (in the U.S. and elsewhere) will follow suit. Google also might be betting Android is too well-entrenched at this point for AT&T and/or Verizon to respond too harshly.
- Last April, The Information reported Google has discussed offering mobile services in Google Fiber markets. Q4 results arrive in eight days.
- Update: The WSJ is backing up The Information's report. It adds Sprint is "hedging its bet by putting a volume trigger into the [Google] contract that would allow the deal to be renegotiated if Google’s customer base swells."
Jan. 21, 2015, 9:47 AM
- Barclays has cut Verizon (VZ -0.6%) to Equal Weight ahead of tomorrow morning's Q4 report, and slashed its target by $3 to $51.
- The firm thinks 2015 will likely be a transition year for the carrier, doesn't expect major industry consolidation given a hostile regulatory environment, and believes competitive pressures will remain intense.
- Q4 expectations are already low, given Verizon stated last month it saw higher churn and EBITDA margin pressure amid strong phone upgrade activity and major price cuts/promos from T-Mobile and Sprint. More recently, the company promised wireless margins would "return to historical levels" in Q1.
- T-Mobile has said it added 1.28M branded postpaid subs (1.04M phone subs) in Q4, evidence of fresh share gains. Sprint has said it added 30K postpaid subs, a reversal from calendar Q3's 272K decline.
Jan. 18, 2015, 12:57 PM
- TechCrunch reports Google (NASDAQ:GOOG) is interested in acquiring Softcard, the mobile payments platform launched by AT&T (NYSE:T), Verizon (NYSE:VZ), and T-Mobile (NYSE:TMUS) in 2010 - it was previously known as Isis, before changing its name for obvious reasons. Though Softcard's owners have invested hundreds of millions in the venture, sources state Google's purchase price could be below $100M.
- Like Apple Pay and Google Wallet, Softcard relies on NFC radios to enable transactions. And like Wallet, it has struggled to get off the ground, as U.S. consumers overwhelmingly stick with card swipes. Hard data on Apple Pay usage remains limited for now.
- Softcard recently laid off 60 employees. Meanwhile, it was reported in 2013 that Google had spent $300M on Wallet-related acquisitions, with little to show for it. The adoption of EMV (chip-and-PIN) readers by U.S. retailers could give NFC solutions a boost, by making card payments a little less convenient.
- The WSJ reports Google is partnering with consulting giant PwC to bid on a $2B+ contract to update the DoD's electronic health records system. PwC says Google's tools could both improve the system's security and performance, and lower costs. A group featuring IBM, HP (NYSE:HPQ), and CSC has made a rival bid.
- Ad tech firm Marin Software (NYSE:MRIN) provides some encouraging mobile search data ahead of Google's Jan. 29 Q4 report. A Marin study found mobile accounted for 49% of Q4 U.S. search ad spend, up from 42% in Q3, and that smartphone ad click rates were 38% higher than PC rates (thanks in part to accidental clicks?). On the other hand, mobile still only accounted for 32% of conversions.
- Medium writer Backchannel provides a deep dive into Google Search's evolution in an era where users increasingly want search engines to know the precise meaning of their queries. Part 1 looks at Google's efforts to optimize for mobile (aided by its Knowledge Graph and Google Now). Part 2 looks at Google's real-world research into the information needs of users. Part 3 looks at Google's investments in A.I./deep learning to deliver far more intelligent search results and spontaneously surface useful information.
Jan. 14, 2015, 4:08 AM
- Building on his previous call for the FCC to regulate broadband service as a utility, President Obama will push the FCC today to overturn state laws that prevent cities from building their own broadband networks.
- The centerpiece of the initiative is a call for the FCC to pre-empt laws in 19 states that can prevent cities and localities from building their own high-speed broadband networks.
- FCC Chairman Tom Wheeler has already indicated that he is strongly considering the move.
- Related Tickers: CMCSA, T, VZ, TWC, NFLX, CTL, CHTR, FTR, ELNK
Jan. 13, 2015, 6:41 PM
- Verizon Vehicle, expected to be available in Q2, provides a slew of telematics services through a system featuring a reader that plugs into a car's diagnostics (OBD) port, a Bluetooth speaker, and a smartphone app. The speaker contains a button for connecting to assistance services, and another for making an SOS emergency call.
- Supported features include GPS-based roadside assistance, automotive diagnostics (i.e. deciphering the meaning of a "Check Engine" warning), stolen vehicle location, a mechanic's hotline, and a vehicle locator. The Verge: "Many (if not most) of these features are available from a modern car's built-in systems, but Verizon's targeting a potentially huge market: older cars with tech-savvy drivers."
- Verizon (NYSE:VZ) is charging $14.99/month for the first vehicle (hardware included), and $12.99/month for each additional one. GM's rival OnStar service (dropped Verizon as its wireless provider for AT&T with 2015 models) has 7M subscribers in North America and China, and is available with 30+ GM vehicles.
Jan. 8, 2015, 4:43 AM
- "There's always speculation around us because we have taken a company that was not doing well and ended 2014 with two straight years of growth," announced AOL (NYSE:AOL) chief executive Tim Armstrong, dismissing talks of possible mergers.
- The company had recently been linked to rumors of a possible joint venture with Verizon (NYSE:VZ) and a merger with Yahoo (NASDAQ:YHOO).
- Previously: Verizon CEO throws cold water on AOL acquisition rumor (Jan. 06 2015)
Verizon Communications, Inc. is a holding company which engages in the provision of broadband and communication services. It operates through the Wireless and Wireline segments. The Wireless segment offers postpaid and prepaid telecommunications network and sells cellular phones and tablets. The... More
Industry: Telecom Services - Domestic
Country: United States