Verizon CFO Fran Shammo decried the price at which AWS-3 spectrum went in the most recent FCC auction, noting that capacity could be achieved by other means.
Speaking at an investor conference Tuesday, Shammo said that in the past spectrum cost less than it did to add capacity using technology. “This auction flipped that balance. We can build capacity for a third of what this spectrum is going to cost,” Shammo said, noting that the FCC’s bidding rules need to be revised to account for companies like Dish, which took home huge amounts of spectrum at a discount while driving up prices for others.
Shammo said that until the cost of spectrum comes down there is “no reason for us to go into the secondary market and buy spectrum at this price. It just doesn’t make sense.”
During the talk, Shammo touched on a number of topics, including the overall state of competition, which he said has been overblown by the media.
“The press makes this price war out to be a lot more than it is,” he said. “It’s just a repositioning of how the customer pays for certain things.”
Shammo said that competition has become less regional and more national as companies consolidate, repeatedly stating that Verizon builds its brand on marketing reliable, fast service as the most important factor when it comes to consumer’s decisions about wireless.
However, “the consumer’s very confused right now about what the best is,” Shammo said. Verizon commercials have tried to explain what exactly a consumer will get with faster service – more reliable video play, for example. “The network of Verizon is our crown jewel. We have consistently stated our brand around the quality of the network, and we will continue to do that,” Shammo said.
Shammo couldn’t avoid the current regulatory debat over the FCC’s Title II “net neutrality” provision. He reiterated Verizon’s position that the new regulations will have “unintentional consequences.”
Verizon’s lawyers have not yet looked at the full 300-page document that makes up Title II, but they will do so soon, Shammo said. He expects a lot of litigation from companies who feel the regulation is detrimental to their business.
“We want to pass regulation that says we don’t expect the ISPs to prioritize, we don’t expect the ISPs to block anything. And at least to my knowledge not one ISP has ever done any of that in this industry,” Shammo said. “So it’s been a very free-flowing internet. Without regulation, we’ve had a lot of investment, we’ve had a lot of innovation, we’ve had companies like Facebook and Google and Apple all of a sudden come to the forefront with all this technology that’s been built. And for some reason now we feel we need to put in a 1933 regulatory legislation to fix what was never broken.”
Shammo predicted that innovation would decrease under Title II, and that jobs would be lost. He was in support of tax reform for the industry, and said that the government should “let the industry work on a commercial terms basis.”
The industry is entering a new world in which almost every device is wireless, Shammo said. Verizon plans to contribute to this world with Verizon Vehicle and an upcoming over the top mobile service.
“I think as the pie expands there’s enough room for all four carriers to expand within that pie, but again for Verizon it’s going to be around the quality of the experience and the quality of the network, and I think we’ve got it right and we’re coming out with some real nifty things this summer,” he said.
