Verizon's Mike Ritter on building a foundation for broadband needs with 300 Mbps
Mike Ritter, Chief Marketing Officer, Consumer & Mass Business Markets, Verizon
Mike Ritter says that when Verizon (NYSE: VZ) releases its 300/65 Mbps speed tier for FiOS and doubles other existing speed tiers later this month, the carrier will be providing a foundation for future needs. Set to be available in GPON-enabled markets, the early adopters of Verizon's new speed tiers will be those consumers who "need the highest bandwidth (and) aren't consuming a lot of linear TV, but rather they are consuming a lot of over the top video like Netflix." Sean Buckley, Senior Editor of FierceTelecom, caught up with Mike Ritter, Chief Marketing Officer, Consumer & Mass Business Markets, Verizon at the recent TIA 2012 event in Dallas to discuss the new FiOS speed tiers and how they are helping consumer make the most out of their bandwidth and service experience.
FierceTelecom: Verizon plans to launch a 300 Mbps speed tier and double existing speed tiers with higher upload speeds to support multiple consumer devices in the home. As consumers add more devices and services into their daily lives, how are you helping consumers manage that experience?
Ritter: I think we do it in several ways. One is, we've got to be really careful to not make it too complex for the consumer. There are all sorts of things they can do today. If I am consumer, I think that I may need to, for example, manage my home from an energy management perspective; I want to be able see when the kids come home; I want unlock the door and turn on the lights if a maid is coming over.
At the same time, I am trying to manage a lifestyle that says, 'what is that I want for my entertainment needs? What do I want to watch that night or record?' Then, 'how do I take that experience with me outside of the house?' We're trying to simplify that by putting all of that into an app where you could go to one place and then, by function, you would say 'do I want to manage my house or manage my TV viewing experience?' all in one easy place that has that ubiquity across all platforms.
You may be sitting at home watching a game on ESPN in the middle of the afternoon and the kids are outside. What I don't want to do is go outside every ten minutes and check on them. If I could sit there as I watch the game, being able to see the kids outside on, say, a pane on my TV set, I can accomplish two things at one time.
As we do these things we're trying to make them very integrated--whether it's into the TV or into the mobile experience via a smartphone or a tablet. We're trying to make it for something that you can afford, like $10 a month. I can create the home monitoring and control domain in an environment that's conducive to me.
Let's say I am a single parent, I may need one camera and unlock doors (feature). But if I am in a large household, I may have to manage multiple thermostats and several different cameras. Anything you put on there does not change the value proposition for the consumer. Once I am paying the $10 a month it does not matter how many devices you put on there.
FT: Verizon has set up an interesting value proposition with home monitoring and control. Where do you see this service going?
MR: I think what we're trying to find out now is, what are the best use cases for consumers in terms of what they see? How do we create the packaging especially from the consumer electronic (CE) device perspective, and what are the future applications that you go after?
For example, we don't have service in the Midwest, but if I was there I think the biggest service would be to be able to monitor my sump pump. In many cases, the alarm does not help you if it goes off on your sump pump and you're not there. If I have the ability for the sump pump to text me, and when it texts me, I can go in there and view that basement and see if I need to get somebody there--those are the ones to extend the service. The great thing is once we've got the customer, they won't pay any extra. They will only pay for another camera in the basement. As we prove we can make this a business in our footprint, we think we'll have a platform to bring this across the top.
FT: You could provide your home control service in regions outside of your territory as an online over-the-top application?
MR: The platform that it runs under, we can use that gateway and the Z-Wave technology in terms of any household. We just need a broadband connection to that. It gives us a lot of opportunity. Obviously, the support calls could come in anywhere. It's interesting because there are two sides of it. You have the energy management side, where if you're integrating into thermostats you'll want someone like an electrician install it, but the monitoring side is all self-installable. Those are the things we would work for an out of franchise offer. I guess the beauty of that is you're sitting with 100 million wireless customers. What they're doing is looking at what we do in the home. We'd use the same common platform that becomes part of their strategy, and based on unique geographic markets that require different CE devices, they would take an active role there.
From the underlying bandwidth perspective, every time you put out something like this, and gaming is a big one, the latency between the applications becomes really critical. The more bandwidth you put in, the more that gets consumed. When we said we were going to these faster speeds, we had some big customers that said 'we want to look at how to develop applications for it,' and a big one was cloud-based gaming.
Some people say, 'will the consumer ever need that much bandwidth?' By itself you'd say, 'are there applications that are going to take 300 Mbps?' Well, no--not at the beginning, but if I have 20 devices in the home, it's more when they're used simultaneously. Every projection says that will double in the next four years. Cable can expand their bandwidth to a point, but they have to take channels away from video so they have to make a content decision, which becomes disruptive. We're not in that same realm because we can provide that bandwidth without taking the content away.
FT: While we know you can't reveal pricing yet, what can consumers realistically expect if they want to adopt one of the new speed tiers?
MR: Certainly our goal is monetize it. What you'll see is we will not be at premium to cable with speed that's generally double. Here's the neat part. About 12 months ago we put in a platform that allows the consumer to build their own bundle. We'll advertise it as Good, Better and Best based on the customer's needs. The Good package has lower Internet speed and fewer channels, while the Best has highest speeds and the most channels. Well, what you see today is the consumers that need the highest bandwidth are those that aren't consuming a lot of linear TV but rather they are consuming a lot of over the top video like Netflix (Nasdaq: NFLX).
We'll increase the bundle prices, but in some cases the consumer can save money because they can say they want 150 Mbps and want to do over the top and have a high definition TV. We won't force them into that content. We'll let them pay for the broadband price of that content. Today, almost 20 percent of the sales we do on the web, the customer has configured their own bundle. That will be how we'll position this. To get that double increase in speed it will be a pretty reasonable increase for you to do that.
FT: Are you going to maintain your existing FiOS speed tiers?
MR: Here's what we're doing: You have your entry point, and the entry point for our triple play bundle is roughly $100 a month and we'll keep that there because in many cases the customer is strapped or does not need a higher speed. Our entry level bundle is 15 Mbps symmetrical. The sweet spot for cable is about 20 Mbps and you may see a few that have 50 Mbps. We'll leave that there and the next bundle up will be the 50/20 Mbps, and the next speed up above that will be 75/35 Mbps. If you wanted x amount of channels, you'll be able to go to that mid-tier of 75 Mbps for a very reasonable up sell. Today, you have some cable operators offering 100 Mbps and that will be typically priced for about $200. We'll have a logical upsell to that package.
FT: In addition to the downstream, the other key benefit here is increased upstream speeds. Talk about how that further differentiates you over what cable can offer?
MR: With most cable offerings, their maximum upstream is around 5 Mbps up and they are limited on what they can do on the uplink. We believe that as the cloud becomes more prevalent, the upload becomes even more relevant. When we think about applications like video calling, you can do it on your computer via Skype, but if I want to do it off my high def TV then the pipes become critical if you want to have that sort of experience. We think that maybe the hidden sauce is that download is important today, but upload becomes more important in the future. We'll position it as, you're future-proofing your decision. Even though you may not need all of that today, we believe in two or three years it's something that becomes critical for you in two years.
FT: You mentioned cloud-based consumer applications. Do you see that trend emerging, and what would it consist of?
MR: Obviously, on the business services side with our investment in Terremark, those become enterprise applications that over time have a consumer aspect to it.
The one that really amazes me is what's being done on the medical side. You have a couple of issues today. The ability for a doctor to exchange information with a patient today electronically is almost nonexistent. You have to receive a phone call or visit the doctor in person because there's no secure standard today. If you think about that from the doctor to the patient or the doctor to the insurance provider, there's a piece there. Then, the other piece is on the chronic side. A lot of the chronic issues don't happen on day one. If you're a diabetic, most of your care is at home. How can then you then provide that chronic care so that doctor can interact with that patient without that patient necessarily having to see the doctor? A lot of that information has to be shared and put in the cloud securely before it gets to the consumer.
From the entertainment perspective, as you see more personal video consumption where kids are sharing video on Facebook or YouTube, all of that gets put up in the cloud and easily shared on any device. It does not get trapped on your PC. If I go there it easily gets to my large screen TV, my tablet or my phone.
FT: Do you see the cloud as being the way that users access and store their respective content?
MR: Right. Think about at home when you tape your shows at home with your DVR. If you think about your set top box with storage, we think eventually you'll want to store all of that in the cloud. There are rights issues to do that, but if we could store that in the cloud what eventually happens is you eliminate set top boxes in the home and your TV is connected to CE devices.