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Verizon's Spectrum of Possibilities

Verizon's Spectrum of Possibilities

Two highly anticipated over-the-top (OTT) services launched this week. While the Disney Movies Everywhere service may target an entirely different audience than the WWE Network service, both offerings aim to deliver a premium digital entertainment product to a highly targeted audience.

During launch, WWE Network was overwhelmed by demand, acknowledging technical hiccups in its tweet: "MLBAM, WWE's tech partner, was overwhelmed and its systems have been unable to process most orders since 9 am due to demand for WWE Network." And as OTT options continue to expand, these issues will only grow more prominent.

What gives? Like the Internet on Valentine's Day delivering the bits and bytes of Francis Underwood, the pipes have been filled with the news of Comcast's acquisition of Time Warner Cable (and John Malone's next move), Aereo's expansion and date with the highest court in the land and Netflix's pay-for-performance agreement with Comcast (and likely AT&T, Verizon, etc).

But much of the focus on Comcast's acquisition overshadowed the reality that Netflix is facing with all broadband providers as an OTT service: it's not just about the content, it's about access.

Comcast's greatest asset besides a broadcast network that continues to produce great content--yes, Jimmy Fallon is a fantastic host who has the pulse of the digital generation but is old enough to remember the 70s--is control of the digital living room. This means control of broadband Internet access within the home. Competitive offerings--whether satellite or cord cutters---are still dependent on a pipe to carry digital content. And, these providers must--as noted by DirecTV CEO Michael White--"ride on someone else's highway."

A recent announcement by MobiTV highlighting its plans to provide a dongle for Pay TV operators referred to the latent opportunities for Verizon.

Verizon has the most interesting combination of broadcast and broadband delivery, digital platforms, and content (the Super Bowl just ended but a sizable audience is already discussing the NFL Scouting Combine results and trade rumors). With its recent acquisitions (OnCue, upLynk and EdgeCast), Verizon has furthered its commitment to a digital future; however, what's truly enabling this strategy isn't the shiny new toys but instead an asset that's been part of its toolbox for years: spectrum. Verizon recently demonstrated its LTE Multicast capabilities at the Super Bowl and has hinted at its potential.

FiOS--based on my experience in New York--may be the best option for wired pay TV and Internet, but I'll find just as many die-hard proponents of Comcast and other providers. Comcast can grow (excluding the regulatory issues), but any further expansion organically or via acquisition of a cable/fiber MVPD will be constrained by financial and physical limitations.

Wireless, on the other hand, is less constrained. If the pay TV landscape were to be radically disrupted, it would be less cord cutting and more expansion of access: not just more lanes to the "highway" but alternate modes. Similar to satellite, subscribers would have the choice to decouple their consumption of cable television from broadband. Consequently, the ecosystem would be forced to acknowledge--and hopefully reduce--these inherent dependencies.

As subscribers, we would still need to pay for transport but at least we could decide whether to drive, ride or fly. And for Verizon, its success as a TV operator may be a route that is effectively OTT…or more precisely, over-the-airwaves...