Verizon steers mobile broadband toward advertising and video with AOL deal

by Steve Blum • , ,

Will the network be neutral enough?

As Verizon runs away from wireline – copper or glass – telecoms service, it’s accelerating towards a video and advertising-centric business model. Yesterday it announced that it will buy AOL, assuming shareholders and regulatory agencies agree. It clearly wants AOL’s online advertising platform, although the draw has to be the technology rather than a killer market share: AOL claims less than 1% of revenue in the online advertising business.

It’s also headed in a different direction than AT&T, at least as far as video is concerned. Where AT&T is trying to buy DirecTv and gain a few million traditional, linear television subscribers, Verizon wants to go over the top. At least that’s how their executive vice president in charge of wireless and wireline operations, John Stratton, described it at an investors’ conference

We are in the TV business; it is still a good draw. Triple Play still matters a lot, but we see a very, very significant shift in the desires of our customers in terms of how they consume video. So obviously in recognizing this, we have begun to make investments in enabling the next generation of video delivery, which we call the OTT stuff, so all the AOL, EdgeCast, OnCue, etc. and our own [Verizon digital media services] leads to that delivery later.

It’s going to be interesting to see how Verizon actually accomplishes that. As Stratton also noted, Verizon is “principally a broadband company”. If they’re using Internet protocol bandwidth to deliver their own programming to mobile customers they could run afoul of the new net neutrality rules, assuming those withstand court challenges.