Surprise twofer at D: Both Verizon Wireless CEO Lowell McAdam and FCC Chair Kevin Martin onstage at same time.
Walt Mossberg starts off by attacking Kevin Martin over broadband penetration, costs, usage. Throws up chart showing terrible broadband speeds.
FCC: Defending penetration rates, but Walt complaining about speed. “Speed is a challenge as well.” It’s important for us to recognise that we need both penetration and speed. But also have to understand demography, geography different for us vs. Korea, Japan.
Walt: Why are we paying more for crappy speeds?
FCC: Because it costs more to roll out. And because of our weird subsidization policies, or lack thereof. We should change our subsidization plan so people compete in reverse auction to provide broadband for cheapest price.
VZ: One of the problems we have with penetration, whether its broadband or Fios, is this locality by locality approval process.
FCC: We’re trying to streamline franchise proces, but still have lots of issues. Have had to deal with migratory birds issues (seriously).
Walt: Do you have authority to make county, city franchise issues a Federal issue?
FCC: We can’t approve them at a local level. But we can change rules on things like right of way applications. But do we have the authority? I don’t know. All the decisions we’ve made are all in court right now.
Walt: Let’s talk about open networks. Tech guys want carriers to let any hardware run on any network. Kevin Martin, how do you feel about last auction and Google’s role in it?
FCC: I think it’s important to allow for standardization across multiple carriers. Reminds us of fact that Verizon has just purchased spectrum that must be “open”. “The industry a year ago is in a very different position than where it is now. We’re not completely there yet” but moving in right direction.
Kara Swisher: This is all because of Google, right?
VZ: Let’s not give Google too much credit here. In the past, customers have complained that they want simpler easier to use apps/phones. Not open source issues. But that movement has grown. Update on open spectrum: Now we have “multiples of tens” of people that have signed on to project, signed NDAs, etc, and “multiple devices on our labs that will be available by end of year.”
Walt: What about pricing? You’ll have “company store” system where you sell subsidized stuff, with big contract. Then “open Verizon”. If I go in, and I bring to your network a phone you didn’t sell, I’m not expecting you to support it, but I don’t want to pay a different rate than your other customers.
VZ: You won’t be. Same prices. We will make some “unique pricing” for some wholesale customers, let them handle billing. Economics work for us because we don’t have to support third-party handsets, support those handsets.
Walt: Termination fees. How do you justify charging people $175 or $200 two years after they’ve bought phone?
VZ: We don’t. We changed that about a year ago. Part of the problem is the subsidy: We spend about $200 subsidizing each smart phone. But we’re going to start tiering that down. We’ll pro-rate termination fee of subsidy over time. And we haven’t seen churn, which is low anyway, change since we implemented different. I’d love to get rid of subsidy, period. It was important when we were trying to get penetration. If legislature wanted to outlaw subsidies, we wouldn’t complain.
FCC: Termination fees do have to decline over time. Some carriers do that, others don’t. And need reasonable amount of time where you can bail out after first bill. I’d like to see 14 days after you receive first bill, perhaps with a “restocking fee”. Some conusmer advocacy groups don’t want us changing this, because they want to pursue class action suits.
Apology to readers: Missed a chunk here. Back on.
Walt: Wireless broadband. Verizon’s at 1 megabit per second, AT&T about the same now. AT&T says they can double that speed this year, via software upgrade, and that next year they can triple it again. So are you screwed until you get to LTE? They’ll be 3,4,5 times faster than you!
VZ: Right. We’ll sit here and do nothing. Haha! We don’t think CDMA will prevent us from competing. We’re sceptical of miracles we hear about. There’s a different between peak speed, average throughputs in the field; plus issues with devices. To get through 3x todays, you really have to change entire device roadmap — need more antennas, for instance. We have built our brand on reliability and speed, and we’re not going to relinquish that.
Holy cow, does Kevin Martin talk fast!
Qs: Will you push to enforce reduction in early termination fees? And what about coverage maps? We need better ones.
FCC: I think we should have parameters re: termination fees that apply to everybody.
VZ: There’s a problem with definition re: dropped calls. What constitutes “coverage” or “dropped calls”? Our solution: 30-day test-drive, absolutely free. No return fee, nothing. See if it works for you. If not, bring it back.
Q: Verizon, you say fees will be same for open access customers. Shouldn’t they be cheaper for open access customers, since no subsidy?
VZ: Nope. We sell additional services on our own phones, and we won’t do that with your phone. But we’ll let market decide.
Missed a lot of this, unfortunately. We’ll get video up shortly.
Business Insider Emails & Alerts
Site highlights each day to your inbox.