Sometimes company or industry culture really does matter, even when the fundamentals of business strategy are based on sober evaluation of financial cases and value.
Would Verizon ever abandon its strategy of “leading” technology innovation in its business? Would Comcast ever abandon its fundamental reliance on “owned” facilities in favor of renting another provider’s facilities?
Such questions might be germane as the next wave of mergers in the U.S. communications business get pondered.
Some suggest a grand bargain could be struck between Verizon and Comcast, for example. Where Comcast would essentially agree to be a wholesale customer of Verizon for mobile services, while Verizon might backpedal on its fixed wireless 5G efforts. That agreement arguably would reduce the threat from Comcast to Verizon’s core mobile business, but also protect Comcast from direct assault from Verizon in the fixed internet access business.
There are lots of important nuances. Would Comcast behave one way if mobile is considered a core business, or differently if mobile is viewed as “ancillary” to its core fixed networks business?
Would Verizon be able to clearly separate its 5G leadership plans from the incremental benefits of nationwide internet access revenues?
Company and industry culture should matter, though. Cable companies traditionally avoid operating core access services on other firm networks. Every tier-one firm buys some wholesale transport, and even some wholesale access. But that is the exception to the rule historically followed by cable companies, which is that services must be provided over “owned” facilities.
For its part, Verizon has for some decades deliberately chosen the marketing platform of “best and most advanced networks.” It is virtually impossible to imagine Verizon allowing any other leading contender to take the lead, in that regard.
The wrinkle, some might believe, is that Verizon would push ahead with mobile 5G, but essentially refrain from aggressive deployment of a fixed wireless capability, if Comcast were to abandon a facilities-based mobile assault.
Either move would be risky and uncharacteristic, if there is a logic. Perhaps Comcast might conclude that even if it has to be in the national mobile business, the capital investment in “owned facilities” is unwarranted. In that potential scenario, Comcast would choose a “good enough” (long term lease) mobile sourcing strategy, rather than “the best” sourcing (owner’s economics).
That would be a major shift of thinking, though. Similar shifts might have to be made by Verizon, as well.
Perhaps Verizon would conclude it has more to gain from keeping Comcast as a wholesale customer, even if enabling a big new competitor.
On the other hand, Verizon has a relatively small fixed network footprint, so the out of market opportunity is fairly significant. But Verizon arguably might consider a limitation on its out of market fixed wireless opportunity for some degree of mobile services competitive protection from Comcast.
Even if Comcast and Verizon agreed to refrain from some of the more potentially damaging forms of competition, that would not restrain other contestants, though.
As logical as a grand bargain by Comcast and Verizon might appear, any abandonment of facilities-based competition by Comcast, in a core service, seems so discordant it is unlikely. And Verizon can not prevent a Comcast entry into mobile services, nor likely dissuade Comcast from adopting a facilities-based strategy.
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