Verizon Communications (NYSE: VZ) plans to use a combination of fiber, distributed antenna systems and small cells to densify its wireless network instead of relying solely on spectrum to meet consumers' growing demand for capacity.
Speaking Tuesday at the J.P. Morgan Global Technology, Media and Telecom conference, Fran Shammo, Verizon's EVP and CFO, told investors that while Verizon's spectrum position is strong, the company plans to lease more fiber and buy more hardware like DAS and small cells to meet growing capacity demands rather than buy more spectrum.
Shammo noted that the company leases fiber from other companies today and plans to lease more. "We lease a lot of fiber today and there's a lot of competition in the fiber world. We don't own a lot of fiber and we don't need too," he said, noting that there are lots of alternatives for achieving more capacity in the wireless network that don't include buying more spectrum. "We don't need to own and build and control everything," he said.
Shammo added that the company is focused on densifying its wireless network first in the top 50 markets, with particular emphasis on the top 10 markets. He noted that the efforts to use hardware to densify the wireless network are already occurring in Chicago, New York and Boston, where the company is leasing a 400-site DAS from another company.
Regarding the company's FiOS network, Shammo said that FiOS video product is still driving profit in the wireline business but added that the margins in video are much slimmer than broadband because of the programming costs. He added that Verizon's experimentation with the "skinny" bundles, where fewer channels of programming are bundled together for a cheaper price, is still in the early stages and the company is not ready to talk about consumer uptake of that product.
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