It’s hard to figure out Verizon’s place in the infotainment world — and CEO Lowell McAdam kept things murky in his appearance today at the UBS Annual Global Media and Communications Conference. He wouldn’t address this week’s surprising report that the phone giant might launch its own national movie and TV streaming service, potentially pitting it against Netflix. But he’s clearly interested in the business: McAdam said that Verizon seriously considered bidding for Hulu. “The jury’s out, but I do believe there’s a place for over-the-top” — jargon for a digital alternative to traditional pay TV — he said. “That model has yet to be determined and I hope we’ll be a player in that.” Wouldn’t that hurt Verizon’s FiOS, which provides a cable-like TV service to 4M subscribers? “Over-the-top can be complementary,” McAdam says. “I don’t think it’s one thing or the other.” He was equally certain that FiOS “will not be disadvantaged” by Verizon’s new agreement with Comcast and other cable operators: The phone company will pay them $3.6B for their wireless spectrum — but also give them opportunities to sell Verizon Wireless phone service, even in markets where they compete with FiOS. McAdam says that he expects FiOS to eventually capture as much as 50% of the video and broadband customers in the markets it serves.
McAdam insists that Verizon has a big advantage over all challengers, including cable, because it runs high-capacity fiber optic lines right up to the customer’s home. That’s why he says he has no plans to introduce tiered or usage-based pricing for broadband next year — something a few cable operators are considering. “It’s not as big an issue for us because fiber into the home is such a large pipe it’s not taxing the network,” he says. One of the big problems he has faced, though, is that it’s expensive to snake the fiber optic lines through people’s homes and apartment buildings. But McAdam says that as the company uses WiFi to transmit signals throughout the home it “dramatically changes the cost” of an installation.
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