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Since it was created out of the merger of Bell Atlantic and GTE in 2000, Verizon has made its money the way most the telecommunications firms do–transporting calls, video and data from one place to another and being paid for the transportation.
But things are rapidly changing. With its purchase of AOL and the launch of a new mobile video service, Verizon is clearly also a media company. And it wants that business to grow — potentially by acquiring parts of Yahoo.
The woman at the helm of identifying these new businesses is Marni Walden, a telecom veteran who previously served as marketing chief and operating chief of Verizon Wireless. With a brutal price competition in the market for delivering data, Walden said it is critical that the company find businesses in addition to just moving bits and bytes.
In an interview, Walden spoke about the changing company and its moves into media, as well as other new ventures such as powering Internet-of-things devices and allowing sponsored data, the equivalent of a toll-free call for the Internet.
She also spoke of the company’s effort to work more closely with startups, including its “Powerful Answers” awards. Walden was in San Francisco this week to give $1 million to three groundbreaking efforts. Among the winners were the creators of a spherical device with 360-degree cameras that can allow first responders to get a sense of a situation before they enter.
Here’s an edited transcript of our interview:
Re/code: Until rumblings of it started, I don’t think anyone would have seen Verizon buying AOL.
Marni Walden: I probably would have said that. Five years ago I don’t think we had the culture or personality to even think about that. A lot has changed in the last couple of years as you start to think about revenue diversity. Making sure that you play in accessing the revenue opportunities above the connectivity is something we think a lot about. We can go do other things because of our strength in mobile.
The company has changed a lot already. What do you see Verizon looking like three to five years from now?
Today we still have our core three businesses that we run: Our wireline enterprise business, our wireline consumer business (FiOS Internet and TV business on the east coast) and then of course our wireless business. All three of those businesses are in various states of growth but still will play an important and significant role in the three-year time frame. Those businesses will still be a big chunk of what we do.
What’s starting to change is really looking at ways to monetize above the access network. We believe that we have the right to play above the network in both platforms as well as services.
Our media company, under the AOL brand, is completely different from what Verizon has done in the past — very sophisticated ad tech capabilities, owned and operated content. People are surprised about Verizon getting into the content space. I think that’s really important to bring eyeballs and audience. Our media business will play a much more significant role in the Verizon of the future.
So what about Yahoo? Other executives have said Verizon might be interested in parts of the company, if they complemented AOL?
I know there has been a ton of speculation there. I don’t think anybody even knows what Yahoo is going to do.
What I would tell you is, we didn’t get into the media company business just to be a single-digit market share player. That’s not why we did the deal with AOL. We have much bigger aspirations of how we want to grow that business. Some can happen because of the scale Verizon brings but we will continue to look at how we scale and be a meaningful player from a double-digit market share, and by market share I think about revenue. We definitely will look to build this business.
You recently launched a mobile video service, Go90. Where does Go90 fit in? What are the economics?
Let me start with the importance of it. First, reaching an audience. We talk about millennials but it’s really younger than that too. The 12-25 (year-old age group), they’re not doing the traditional viewing. A ton has been written on cord-cutting. Addressing that audience through mobile, which is the first screen that audience looks at, is important to us.
The monetization path, there are really three different ways, the first of which is advertising. That can be significant. That’s a sizable business. We’re just getting into that.
The second is data utilization, but as you know Go90 is cross-carrier — so it’s not just on Verizon and that’s important because of the advertising. And then, the third — and we haven’t talked about this in detail — but we think there is an opportunity for a premium content upsell subscription. And it may not be the typical subscription that you think about, $10 a month. It could be more like a pay-per-view model where you pay once to tune in.
Advertising is the majority of the monetization for that. Every advertiser is struggling to reach that audience. It has to happen on mobile because that’s where the eyeballs are for that audience.
Where does spectrum play into this? There’s a big auction coming up next year. Do you need a bigger chunk of the airwaves to do what you want to do?
We’re well positioned today, but as always we’ve participated in all of the meaningful auctions. We’ll see what happens with the various rulings coming out, but we are very well positioned today.
Sprint and T-Mobile have a lot of people that buy capacity and resell it, whereas historically Verizon and AT&T have done less of that. Do you see that changing?
Our strategy has not changed there. We continue to have very strong retail relationships with our customers. That’s been important to us and we continue to do business what way. We do a lot of business with companies like TracFone, which fills some of that prepaid need for us. We obviously get approached by all of the different wholesalers, or MVNOs. We think about those and take it into consideration.
In looking at the finalists in the Powerful Answers contest, there were a lot that focused on key safety things. That’s not always what people think of when they think of mobile. Is that a trend?
It’s really great to see when technology can be put to good use that helps communities. Unfortunately, we are tested far too often with natural disasters and 9/11 where the wireless business and even the entire network business we run becomes so important to providing safety. We’re proud to be in that kind of business.
We’d like to get out of that business but Mother Nature and the world just tests us frequently. I’m not surprised mobile is at the center of some of those things. There’s so much more that can be done.
The best thing is that 25 percent of the finalists were female. I’m disappointed that it’s not 55 percent, but we are making progress.
https://www.youtube.com/watch?v=vZWqWCB_GzU
Where do you see retail fitting into the future? Verizon and all the carriers invest a tremendous amount to run a ton of stores. Do you see things continuing in that way?
I think retail is important. Having hands-on places where people can get help, I think is important.
You may not see as many locations but retail will still be a very important part because technology is rapidly changing and people like to learn.
With the disappearance of two-year contracts, have consumer phone buying patterns changed? Are consumers keeping their phones longer? Are they upgrading more often?
I think it probably hasn’t changed significantly. I think it allows whatever that small percent — it’s probably less than 10 — who always have to have the newest device, but I don’t think behavior has changed drastically. I think the device releases are still driving upgrade cycles just as they always have.
Your purview is all these sorts of new business areas. Where are the biggest opportunities?
I think IoT (Internet of Things). Everybody’s talking about IoT. I think it’s extremely promising but I do think it’s got a very, very long runway to the large revenue streams. Media is another.
This article originally appeared on Recode.net.
