Verizon LTE Strategy Opens Path to Quad-Play Expansion

Lowell McAdams, chairman & CEO, Verizon

Lowell McAdam, chairman & CEO, Verizon

January 28, 2013 – Verizon Communications’ ambitious plans for LTE make clear the carrier is getting closer to making the mobile 4G service not only a greater force for entertainment and new types of applications in the wireless domain but a highly competitive solution for fixed broadband service as well.

Last summer the carrier launched “HomeFusion Broadband,” an LTE-delivered service to the home meant for rural areas lacking other broadband services. Now, it seems, ever denser build-out of the LTE infrastructure combined with LTE home gateway advances and a broadening array of live and on-demand video content is putting the carrier on track to compete aggressively against fixed service providers outside its own fixed-line footprint.

In a wide-ranging keynote speech at the Consumer Electronics Show Verizon chairman and CEO Lowell McAdam put video at the top of a list of expanding opportunities for the LTE service, which also included automobive telematics, machine-to-machine applications and health services support – all with heavy emphasis on cloud computing as the “third wave” of the digital revolution. By 2014, McAdam said, the company expects to begin delivering live broadcast TV over LTE utilizing the 3GPP enhanced Multimedia Broadcast Multicast Service (eMBMS) standard, building on the ever-expanding portfolio of on-demand content it’s offering through its FiOS Flex View and new Redbox Instant service.

In essence, he said, the carrier is leveraging new technology tools to do things that haven’t been feasible now that it has sufficient bandwidth across its 100 gigabit metro backbones and the LTE access infrastructure to take content to the next level. “We’re expanding our video service to where we can put video in the cloud and deliver it to any device,” he explained. “Our goal is to break down the barriers between the home and mobile once and for all and to come up with video services that move seamlessly across any platform and any device.”

At its exhibit on the show floor the carrier was highlighting a new LTE Multiservice Gateway for the home that is optimized to deliver voice, video and data services at up to 100 megabits per second downstream and 50 mbps upstream using the advanced communications capabilities of the IP Multimedia Subsystem (IMS), which will allow mobile carriers to bring IP-based carrier-class voice service to LTE subscribers along with other IP applications not previously possible over mobile. The gateway, a joint development effort of chip makers Altair and Lantiq and IMS software stack supplier Ecrio, delivers simultaneous multiple services over the 4G LTE network to all IP devices in the home.

Describing the gateway in a blog issued at the time, Verizon spokesperson Debi Lewis called the device “a perfect solution for residential and small and home office users.” The gateway delivers secure home networking and multimedia applications from the Verizon LTE network via Wi-Fi 802.11n in the home, “allowing it to support a complete connected home ecosystem” just like “a fixed-line broadband network would provide,” Lewis said.

How all this plays out in conjunction with Verizon’s evolving relationships with the major cable MSOs from which it purchased AWS (Advanced Wireless Service) spectrum last year remains to be seen. But it’s clear the time is rapidly approaching when all the pieces will be in place for purchasers of LTE service to have the equivalent of a complete broadband quadruple-play service should they prefer to rely on over-the-top sources for TV entertainment.

Presently, McAdam said, individual users’ data rates on the carrier’s LTE network are averaging 10-12 mbps. That will probably remain the case while the initial buildout proceeds to completion, but, beyond that point, the carrier is expected to leverage new small-cell technology as well as to put more spectrum into play in order to bring those individual access rates ever closer to the 100 mbps target that originally defined 4G.

The Verizon LTE network now reaches 89 percent of the U.S. population or about 273 million POPs and, by year’s end, will completely cover the area served today by its 3G network, according to Tom Pica, executive director of corporate communications at Verizon Wireless. As a result, Pica wrote in a recent blog, “more people across the country can take advantage of 4G LTE’s speed and coverage to access new and exciting services, including the in-home solution HomeFusion Broadband.”

Presently that service is priced at $60 per month with data rates at 5-12 mbps downstream and 2 mbps on the return and a 10 gigabyte monthly data cap, with higher usage levels available at higher prices. There’s an upfront $200 equipment cost but no installation fee.

What the HomeFusion service profile will look like in the years ahead as new gateways come on line like the one introduced at CES and as data speeds increase is anybody’s guess, but the carrier’s plans to expand its LTE video portfolio will obviously contribute to the appeal of the home service. Those plans appear to be fairly ambitious when it comes to leveraging new relationships with content providers to deliver high-value live content.

The new approach will be very different from the packaged V Cast video service Verizon was offering in conjunction with Qualcomm subsidiary MediaFlo USA prior to killing it in December. Already, of course, the carrier is delivering NFL games offered on Thursday, Sunday and Monday nights as well as the playoffs on its $5-per-month Mobile NFL service as part of its $720-million four-year sponsorship deal with the league.

In describing how Verizon will benefit from the eMBMS technology, McAdam noted that today a video distributed to end users must go out over a separate channel to each even if it’s a live broadcast channel. “With LTE Broadcast we’ll be able to stream to everybody over a single channel at one time,” he said.

The cloud-based component of video operations creates virtually unlimited ways to model how video is distributed, allowing providers to tailore content to people in a given location, whether it’s a city or a public gathering place such as a stadium or college campus. Appearing with McAdam at CES was NFL commissioner Roger Goodell, who described how the league is using the Verizon capabilities to provide video coverage of games for people in the stands, allowing them to watch replays, view contested plays under official review, watch the game from different camera angles and look up statistics.

As the viewing experience at home gets better, the league needs to create a stadium experience to keep pace to ensure attendance remains high, Goodell noted. “We need solutions for being able to get that kind of video, that kind of data into our stadiums,” he said. “We’re doing this by offering NFL Mobile in our stadiums.”

At the same time, Goodell noted, the availability of games online gives the league global reach for a budding fan base outside North America. “We no longer have to go through a broadcast partner to reach our fans,” he said. To which McAdam replied, “We’d love to broadcast the Super Bowl globally in 2014.”

All of this has important implication for the evolution of pay TV service models. With its FiOS TV Flex View service now offered in streaming mode, Verizon has made a growing portfolio of on-demand and live content available to its FiOS TV subscribers wherever they are via whatever mobile service they’re connected to. As previously reported, the company is exploring the possibility of licensing content to create a fixed and mobile broadband-delivered FiOS TV service that would be available as a subscription service to people everywhere, not just those served by the Verizon fiber network.

Given the types of benefits already enjoyed by the NFL and other online providers of high-value live content, the types of features and functionalities they can achieve through a video service platform like Verizon is developing for LTE may be the inducement to forging new business models that overcomes fears of cannibalizing the old ones. Having developed a channel store for FiOS TV as a “kind of jukebox for TV” that subscribers can use to access content “anywhere in the world,” as McAdam put it, Verizon has built a tempting venue for monetization, featuring and reach which would make a Verizon-branded combination LTE mobile and fixed service a force to be reckoned with if licensors can be persuaded FiOS TV for everyone is a good idea.