But as AT&T Inc. (NYSE:T) struggles to claw back, Verizon Communications Inc. (NYSE:VZ) is already starting to see the benefits of its expansive 4G rollout. Apparently, video and cable TV streaming to mobile devices is taking center stage among cable TV firms and other content providers. Despite the huge prospects in this business, the biggest hurdle has been getting fast connectivity. This seemingly impassable hurdle has however been trampled upon by the super fast 4G network. For this reason, top cable TV firms have signed off on working with Verizon. They hope to leverage Verizon Communications Inc. (NYSE:VZ)’s expansive 4G network to extend higher quality services to a broader client base.
Verizon gets cable TV deal, AT&T pushes for Hulu
Early this month, regulators gave the green light to a joint venture between Verizon Wireless and top cable firms Time Warner Cable, Cox Communications, Comcast and Bright House Networks. Speculation is rife that there will be a wide range of products relating to the joint venture in the fourth quarter as signaled by Verizon Communications Inc. (NYSE:VZ) CEO, Daniel Mead, who in a May conference with Jefferies said: ‘We look at the fourth quarter as a very important time for us in the marketplace. We have a very active pipeline.’
Unless you are living under a rock, you know by now that AT&T is among the three heavyweights that have been confirmed to be in the race for Hulu. Joined by KKR and DirecTV, AT&T is seeking to take control of Hulu, which grossed revenues of $700 million in 2012. Hopefully, if it outbids the rest and inks a deal, it will adapt Hulu’s model of selling ads on its free service or alternatively, design an entirely different revenue collection model.
Only time can tell whether AT&T will put pen on paper and ink a deal with Hulu. However, what remains clear for now is that AT&T is looking for ways to step up its video streaming product portfolio, which incidentally is doing well – well enough to scare big cable firms to side with Verizon Communications Inc. (NYSE:VZ).
AT&T video streaming business doing good, but Verizon has the ultimate edge
As far as AT&T’s video streaming services go, it is doing relatively well. However as of now, debating the possible direction of the Hulu deal would be shooting in the dark.
Even if AT&T managed to pull Hulu under its wing, there are some great risks. The fact that it will influence, in part, the content that end users will get will mean that it will bear the brunt of discontent among consumers. This carries great risk as it puts its reputation and brand right in the midst of open fire.
Verizon Communications Inc. (NYSE:VZ) however has an edge when stacked against AT&T. It will merely present the infrastructure for cable TV firms. This means that consumers will, for the most part, have to settle scores with content providers; this is of course assuming Verizon’s 4G network doesn’t form a habit of breaking down.
Secondly, cable TV firms want to make a broad push into the Wireless marketplace in order to plug the customer loss that is being caused by mobile video streaming services offered by AT&T, Dish Networks and DirecTV. This suggests that all four cable TV firms in the joint venture with Verizon will exhibit increased aggressiveness going forward.
Verizon could use the combined force of the four firms that have taken on the joint venture to make indirect yet formidable hits at AT&T. If AT&T gets Hulu, there could be some changes. Still, Verizon has a clear edge because of its expansive 4G network.
Sprint Nextel Corporation (NYSE:S), the third largest carrier, is of now still not a threat. Despite advancing fierce competition in other fronts, Sprint Nextel Corporation (NYSE:S) doesn’t have the muscle to compete with AT&T and Verizon Communications Inc. (NYSE:VZ) in video and Cable TV streaming to mobile devices. However, it recently completed the purchase of Clearwire and now owns 100% of the company. It will now have full control and it is clear that it plans to use Clearwire’s spectrum to step up its ongoing 4G network rollout. It has targeted 120 cities for summer.
Conclusion
Verizon’s expansive 4G rollout gives it a strategic edge over its peers when it comes to video and cable TV streaming to mobile devices. Streaming to mobile devices is poised to grow incredibly going forward as more people welcome the idea of accessing the world through their smartphones and tablets. This factor strengthens the long case for Verizon, and suggests that it will be able to sustain growth going forward. Verizon is a Buy.
The article Verizon’s Expansive 4G Rollout Gives It an Edge in Video Streaming Business originally appeared on Fool.com and is written by Lennox Yieke.
Lennox Yieke has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Lennox is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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