Ahead of officially taking over the role as chief executive of Verizon’s consumer group next month, Manon Brouillette laid out a few priorities during an investor conference Wednesday alongside outgoing group CEO Ronan Dunne.
Dunne is stepping down effective January 1. Asked during Barclays virtual Global TMT Conference about the timing of his exit, Dunne said it felt natural because Verizon’s platforms are built out and the strategy has been fully and clearly articulated.
The last 12-15 months “completed the jigsaw” in terms of strategic assets like acquiring TracFone and C-band spectrum for 5G, and for Verizon’s operational structure, to execute on the strategy, he said.
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Brouillette, the former head of Canada’s Vidéotron, joined Verizon over the summer and said the way she’ll operate the business won’t involve a shift in strategy, but to refine it and accelerate growth.
“I really see the future for Verizon as being some kind of a disrupter in the broadband industry,” Brouillette said. Not in terms pricing, she noted, but rather bringing alternatives and value to consumers in “markets where most consumers are kept captive.”
Brouillette is focused on profitable growth for Verizon and said she was very aligned with a strategy formed by Dunne and Verizon CEO Hans Vestberg to maximize all aspects of the carrier’s network platform.
MVNO relationships
In comparing the U.S. market to Canada, Brouillette was positive about how operators like Verizon leverage their networks in wholesale relationships with MVNO partners.
“When you look at Canada, there were no MVNOs. We had to be forced by regulator to allow people to surf on our broadband networks,” she said. “So it’s a very very highly regulated environment because the operator wanted to save their platform for themselves.”
In contrast, she views Verizon as embracing the future with more control over MVNO deals. Charter and Comcast are two major cable players that offer their own wireless service on Verizon’s network through MVNO relationships.
“We are able to maximize in all aspects,” Brouillette said. “Having those MVNO deals on our own terms is a gamechanger for us.”
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For MVNOs, Dunne and Brouillette downplayed a concern that Verizon is in some ways enabling a growth issue, with a new set of competitors that the carrier itself increasingly relies on for revenue and must fight against for subscribers, as cable and mobile models converge more closely. Together, Charter, Comcast and Altice had 7.03 million mobile customers at the end of Q3.
Brouillette said growing its own customer base is one of Verizon’s first targets, but increasing revenues of the base will certainly also come through partnerships to bring value and migrate consumers to 5G.
MVNOs would’ve gotten access to the market one way or another, Dunne said. “It’s not like we created a new competitor that wouldn’t have existed otherwise, the smart thing is we did it on our terms not on somebody else’s,” he continued.
He also pointed to benefits from owners’ economics that applies to offering both fixed wireless access and mobility services from the common network platform, saying it creates more choice in how to present value propositions to customers than for someone with third-party mobile access.
According to Dunne, Verizon isn’t approaching fixed mobile convergence - now with a 5G home internet FWA service along with its Fios and 5G mobile - as a traditional bundle and discount but rather product and service innovation in broadband.
Fixed wireless access
As Verizon looks to offer new services in the residential broadband market, Dunne suggested it wasn’t by accident that the carrier pursued OTT content relationships like its Disney+ offer.
“Cord cutting and cord shaving actually accelerates the addressability of the market for us as we move into the FWA era,” he commented.
With around 150,000 FWA customers as of Q3, Verizon aims to pass 70 million homes through its fixed wireless and Fios footprint by 2025. Verizon executives like Hans Vestberg have also touted the fixed wireless access opportunity during investor conferences this week.
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Dunne described FWA is one of Verizon’s three vectors of growth specifically focused on the 5G. The other two include moving customers up the ladder of tiers from metered ultimately to premium unlimited and targeting the prepaid segment with TracFone.
For the incoming consumer chief, Brouillette said the way she looks at the Verizon network platform is “we have to get connectivity for the best cost per bit to any market” alongside value and speeds for customers.
That doesn’t always mean Fios, she added, saying the approach to market involves engineers moving through their metrics to determine if FWA or Fios is the lowest cost to pass a home.
“We are starting now as a national broadband player, that’s the new era from Verizon and we need to dominate that because we are the number one in mobility and I want us to be the number one in home broadband as well,” Brouillette reiterated.
She pointed to broadband, be it fixed wireless or fiber, as a new entry door to grow customer metrics.
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“We have to maximize all those doors to capture new customers and then to upsell them through the tiers,” Brouillette said. “It will enable us to reduce churn, it will enable us to improve satisfaction” noting that data shows triple play customers have much higher Net Promoter Scores (NPS) than others.
A combination of Verizon’s different strategy aspects will help growth in the future, not only for the subscriber base but revenue and EBTIDA as well, she said.
TracFone
For TracFone, Brouillette believes it has agility and a lean structure that Verizon can also implement, while Verizon can bring innovation from a technology perspective.
Across its different brands, America Movil’s TracFone has around 21 million customers and migrating prepaid to postpaid is another area to grow average revenue per account (ARPA). Brouillette also indicated it provides yet another base to address the broadband service with.
“[TracFone’s] really great at innovating from a go-to-market strategy standpoint, but now we can bring even home broadband to areas where they could not afford it, in a way that will be suitable for our P&L…but bringing connectivity to a broader audience,” Brouillette said.
Dunne said Verizon will run TracFone as operationally independent, but coordinated on go-to-market plans.