Verizon Communications's tests of its Long Term Evolution (LTE) wireless broadband technology with satellite giant DirecTV have come to a close, and despite reports to the contrary, the wireless giant isn't quite ready to say whether the relationship will move to the next phase.
Verizon began trialing LTE service with DirecTV in late 2010, attaching a "soup can" transmitter to DirecTV dishes in a few homes in Pennsylvania to receive wireless broadband service. Verizon already resells DirecTV satellite video service in areas where it does not offer its own FiOS TV product. That reseller arrangement is not affected.
But a report in Communications Daily quoting Verizon CEO Lowell McAdam set off a bit of a firestorm Thursday, claiming that the telco was terminating the LTE trial in order to concentrate on its spectrum and co-marketing deal with a trio of cable operators -- Comcast, Time Warner Cable and Bright House Networks.
On Dec. 2, Verizon Wireless agreed to buy 122 AWS wireless spectrum licenses covering 259 million people from SpectrumCo, a consortium of the three MSOs, for $3.6 billion. That deal also includes several agreements that will enable the parties to sell each other's products. By 2015, the cable companies will have the option to sell Verizon Wireless service on a wholesale basis.
In an interview with Communications Daily after his formal presentation at the UBS Global Media & Communications conference in New York, Verizon CEO Lowell McAdam appeared to say that the telco was ending the DirecTV trials as a direct result of the SpectrumCo deal.
"One of our hallmarks is focus and we're focused on getting Comcast up and running and I can't do both so we made our choice," McAdam told Communications Daily.
But people familiar with Verizon's thinking said that McAdam may have been talking more about the telco's overall corporate focus.
"I don't think it will exclude anything," said the person who asked not to be named.
Verizon Wireless said the LTE trials have simply concluded.
"Trials don't last forever. The trials are done," said Verizon Wireless spokesman Jeff Nelson. "There is nothing to announce from the results. We are still in discussions with DirecTV about a host of different commercial opportunities."
DirecTV declined to comment. Shares of the satellite TV giant were down 4.7% ($2.26 each) to $45.43 on Thursday. The stock began to rebound slightly, up 1.1% (51 cents) in afternoon trading Friday.
In his formal presentation at the UBS conference Wednesday, McAdam didn't talk about DirecTV, but touted the wireless spectrum buy, adding that it gives the parties a means to seamlessly integrate video between multiple devices.
McAdam said as Verizon was building out its LTE network it realized it would need a partner to make it a truly national play. That's where the cable companies came in.
"Because while we could do it and do it very well within the FiOS footprint, wireless is a national asset and I needed to look for an opportunity to expand that scale," McAdam said at UBS. "So that is when we started talking about a joint venture where we could develop these integrated, truly integrated products and bring them around nationwide."
Todd Spangler contributed to this report.
