Verizon CEO: We see a Netflix deal ahead

Verizon CEO: We see a Netflix deal ahead

Summary: "The big companies (Google, Netflix, Apple) recognize those that use a lot of bandwidth should contribute to that," says Verizon CEO Lowell McAdam.

TOPICS: Networking, Telcos

Lowell McAdam, CEO of Verizon, said Tuesday that he expects to reach a deal with Netflix to prioritize traffic and deliver better service. Such a deal would be similar to the one Netflix inked with Comcast.

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Verizon recently won a court case that shot down the Federal Communications Commission's ability to enforce so-called net neutrality rules. The Netflix-Comcast pact came soon after. Under that deal, Netflix is paying Comcast for the bandwidth it consumes.

McAdam expects a similar arrangement for Verizon and Netflix. In a talk at the Morgan Stanley Media and Telecommunications conference, McAdam said network prioritization will be the norm.

MoreComcast and Netflix reach interconnection agreement | FCC chairman proposes new net neutrality rules following Verizon decision | Netflix traffic slowing on Verizon FiOS 

He said:

People are realizing: if you have got an intelligent transportation system, or you have got an intelligent healthcare system, you are going to need to prioritize traffic. You want to make sure that if somebody is going to have a heart attack, that gets to the head of the line, ahead of a grade schooler that is coming home to do their homework in the afternoon or watch TV.

So I think that is coming to realization.

The big companies, we have a good understanding with Google; you saw the Netflix-Comcast deal this week which I think -- or a couple weeks ago -- which is smart because it positions them farther out into the network, so they are not congesting the core of the Internet. And there is some compensation going back and forth, so they recognize those that use a lot of bandwidth should contribute to that. I have spoken live and via email with Reed Hastings, and I believe that we will get some sort of an arrangement with them as well.


Ultimately, McAdam is well aware that carriers make their money transporting data. He also said that broadband connections are surpassing TV hookups and that ultimately content providers may ink broadband deals that span networks. McAdam was largely talking Verizon's game since the carrier would love to move content from its fiber-optic lines to its wireless coverage on an integrated platform.

"If you look at our results in the past, way back, we would sell roughly one broadband and one TV together; and then we began to see a little divergence; and now we are seeing some significant divergence," said McAdam. "People are buying much more broadband than they are the TV packages. You also see evidence of that in the growth of Netflix. So I think that over-the-top is coming."

Overall, McAdam is positioning Verizon, which will have full control over its wireless unit after a Vodafone buyout, as a platform company. "The thing that we see coming from the customer requirements is far more integration of services as we go forward. So video that moves seamlessly between landline and mobile; security assets that not only work in the enterprise but work in," said McAdam.

Among the key platforms:

  • Security platform: McAdam said that its Cybertrust unit "can't meet the demand out there at this point." He added that data breaches at Target and the banking system have led to a demand spike in Verizon's cybersecurity services.
  • Telematics: Verizon's purchase of Hughes Telematics has led to a launch in China with Mercedes and a platform to target verticals such as healthcare, energy management and traffic. "I think, three or four years from now for people to have 5 to 10 different devices in their lives between their cars and their home and their personal electronics," said McAdam.
  • M2M: Verizon's multiple machine to machine efforts. McAdam touted its NFL partnership and embedding sensors into stadiums, parking lots and the playing field. Healthcare is also a big play for Verizon.

Topics: Networking, Telcos

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  • A load of crap

    The CEO should be ashamed to even be talking about this, I had to follow to get good streaming during the Netflix - Verizon greedy have corporates to be ? Do we need another occupy wall street ?
    • I agree

      It would be like charging the driver of a car for going down your street to get where he/she needs to go.
      • Occupy Wall Street

        No, we don't need another Occupy Wall Street. One was bad enough.
      • Or another analogy...

        It's like charging drivers for the tollway and then charging Ford to let all Ford vehicals use fast lane :)
        Tomas M.
    • kill streaming? yes

      i dumped cable services because the providers bundle a bunch of stations i will never use. charging 150/month for 200 stations, of which 50 include infomercial content that i will never watch, 25 sports channels i also will never watch, and another 50 spanish channels i will never watch(i only speak and understand english) . by the time i filter down the channels i actually watched, it ended up being maybe about 5 channels of which i only watched a few programs offered at times i had to work my schedule around to even catch, 150 dollars/month for a few channels and only for a few shows i watch? hardly a bargain...I DUMPED TV CABLE for internet only...I STREAM all the content i want. when i want. and how often i wish. i think the isp providers are becoming wise to this new model, and want to monitize on this "work-around" . i knew it was only a matter of time...and yes...greed is the only motivator for business. what did you expect...i do believe they want to sqash streaming services as much as possible, unless you want to pay for it as an additional choice. i would rather pay for the exact programing i wish to see, than pay for a package that i will never use most of the services they offer. phone companys did the same way back when they killed "the all in one " service for local, and long distance calling, and charged for local, then different packages that most suited your needs , so to speak....its all greed....yes. but since we want the service, yes again, we will end up paying for it...and yes again, we are again slaves to what ever they want....surprised? im not.
  • Isn'it it Netflix customers consuming the data?

    Netflix doesn't inherently use any bandwidth. It's their customers downloading tons of HD content.

    If they charge Netflix more money, cable companies are double-dipping - they are charging their customers for their cable connection, and now will be charging the data originators as well! Talk about a profit move.

    Netflix will accordingly raise their prices, reducing the number of Netflix customers... not good for Netflix customers, for Netflix themselves, or ultimately Verizon after they force this spiral to start.
    • Cable companies have always double dipped, they rip everyone off equally.

      They charge the content provider and receiver raking it in from all victims.
      Reality Bites
      • From my experience working with the industry

        Content providers charge for content and many of the 'garbage' channels are forced on the cable company and MUST be carried in order to get the stuff people watch.
        The Heretic
    • Bingo, geolemon

      If this goes to a court and I do see a class action lawsuit here, Comcast and Verizon are going to get SPANKED by the courts. Forget Net Neutrality.... this is anti-competitive business practices, i.e. Sherman anti-trust territory.
  • Really?

    Watching Netflix is the equivelent of someone having a heart attack?!?
    • No, it is not

      However, if they try this with Netflix, who is to say that Skype won't be next on the agenda?
  • Question for a guru

    Why should Cablevison/Optimum (coax to my house) be just a tad slower than Google Fiber and way faster than Verizon Fiber?
  • TV/Netflix

    All this dialog is based on there being something worth watching on TV and or Netflix, I have not seen much indication of that in the short term.
    • Regardless, Netflix distributes more content than any TV station

      in the U.S., and they were doing it without a TV broadcast license and without the accompanying costs of running a national TV network.

      The amount of content that Netflix "re-broadcasts" via the internet, is far beyond the amount of content that ISPs expected that would be going through their broadband services. If Netflix and other major content providers did not exist, it's doubtful that Verizon and Comcast and other ISPs would be worrying about the amount of content consumption that is flowing through their wires.
      • True, the cable companies should be looking at a partnership with Netflix

        Where they give Netflix access to their entire back catalog of shows and use the Netflix UI to stream things.

        I MUCH prefer NetFlix and Hulu's UI's over the craptacular and S L O W UI that the cable boxes from my cable provider have.
        • That makes no sense.

          The only part that I partly agree with, is the one where Netflixx and the ISPs partner to deliver Netflix's content. The content from the ISPs belongs to the ISPs.
    • Are you kidding?

      NCIS, NCIS: Los Angeles, Kill La Kill, Resurrection.... there is plenty of good television on and more of it coming out all the time. Plus, I watch old episodes of MacGyver, Star Trek, TNG, etc. via Hulu.
  • This infuriates me!

    That the ISP should make ANY money from content or use of their network other than the connection fee is reprehensible.

    This is like the contractor or plumber that connected you to the water supply for your house. Then comes and demands more money because you installed a pool and you will now use more water than many of your neighbors.

    This is just plain GREED.

    Most ISP's sold oversubscribed services to gain market share. Now they demand content providers pay money since the end user customer will shift to another lower cost ISP for comparable or adequate bandwidth. Additionally the content providers have "deeper pockets" and have more to lose. Ultimately this additional cost will hit the end user customer's pocket as cost of the content rises to pay these "connection fees".

    It incenses me that these monopolistic utilities use these tactics.

    I suggest that Netflix, Google, and the rest just add the ISP cost as an itemized surcharge based on the subscriber's IP address. It might prompt the customer find a better ISP.
    • Find a better ISP?

      when there's 2 broadband choices here. 45 miles NW of Phila., Pa. Verizon or Comcast. OOPS, forgot Dish or Hughes Wildblue. Might as well forget them. Bandwidth caps and all. :>b
  • Customers have paid for the entire infrastructure, the ISP's are greedy

    Customers pay for bandwidth, when the ISP doesn't honor the agreement they should be out of business. Like all parasites they suck from everything they get near.

    The ISP's need lots more competition not less.
    Reality Bites