Verizon CFO Fran Shammo sees strike impacting FiOS, says wireless upgrades are slow
Verizon Communications CFO Fran Shammo discussed the company’s network strategy this morning while representatives from the Communications Workers of America protested outside the MoffettNathanson Media and Communications Summit in New York. The annual event brings wireless carriers and cable operators together before an audience of analysts and investors.
Outside, protesters chanted: “What are we fighting? Corporate greed!” Inside, Shammo shared nuggets of network information, saying the carrier is determined to densify its network in the biggest U.S. cities.
“When you think about the wireless network, the fiber network, that’s really where our concentration is right now,” said Shammo. “We continue to densify that LTE network, continue to spend capital at a pretty consistent rate, actually increasing year-over-year, and we’re doing that for the densification of LTE but also in preparation for 5G.”
“All of the wireless [capital expense] spending is densification,” Shammo added. “Although we still build macro cells, it has significantly decreased. It is all around the densification. So the majority of that capital is all going to densification.”
Shammo expects Verizon to continue to budget $17.2 billion to $17.7 billion per year in capital expenditures going forward. That amount includes both wireline and wireless spending.
Shammo noted small cells are an important part of network densification, and said it can take up to two years to get a small cell deployment underway.
“It is about a 24-month period of time by the time you get a location, you negotiate with the landlord, you get the fiber to that location, because every single one of our small cells has fiber backhaul to a macro cell,” Shammo said. “You need the time, plus vendors need to know exactly what your forecast is for equipment manufacturing.”
Shammo said Verizon will pursue its densification drive regardless of what happens in the 600 MHz spectrum auction. That auction is the Federal Communication Commission’s latest move to transfer spectrum from TV broadcasters to wireless carriers. Broadcasters are in the process of selling their spectrum to the government in a reverse auction, which the FCC will then auction to carriers and other bidders.
While protesters outside shouted “one day longer, one day stronger,” Shammo said new orders for Verizon’s FiOS service have dropped significantly because of the strike. Many of the employees who have walked out work in Verizon’s wireline business. More than 35,000 workers have been on strike since mid-April. The U.S. Department of Labor recently said it had convinced both Verizon and the union to return to the bargaining table.
The dip in Verizon’s FiOS business could come at a difficult time for the carrier as this is a traditionally slow time for customer upgrades on the wireless side.
“Upgrades are very slow right now,” Shammo said. “I think what you’re seeing is consumers are waiting to see what’s potentially coming in the fourth quarter.” Shammo was alluding to Apple’s product release cycle, which has traditionally included a new flagship iPhone in the fall.
Image source: Pete Sikora
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