Verizon Communications Inc. (VZ): The Telecom’s Investment Strategy To Kill Cable

Verizon’s investment strategy
McAdam’s speech to the NAB was focused on the fact that currently 50% of the company’s network traffic comes from video, and this is expected to rise into the future. In his speech, McAdam recounted a conversation he had with Apple Inc. (NASDAQ:AAPL)‘s Steve Jobs. The two had discussed the importance of making the iPhone 5 LTE compatible. Jobs apparently conceded that given the ability of LTE to allow video streaming, he saw the importance and the iPhone 5 made the LTE jump. Verizon’s investment strategy clearly includes both technology investment in the form of LTE expansion, and soft investments like buy-in from Apple and others.

The incentive for Apple, in particular, to help wireless carriers make the leap to broadcasting is a bit of a balancing act. On the one hand, Apple drives revenue through iTunes — made more appealing on the LTE network. On the other hand, if Verizon Communications Inc. (NYSE:VZ) makes a full leap to broadcasting, it will potentially cannibalize some of Apple’s iTunes revenue. Ultimately, the progress that LTE represents is inescapable and Apple will embrace it as a matter of necessity.

Verizon’s investment strategy for LTE may not specifically be targeting cable, but it has the potential to be the type of disruption that could change the entire landscape of how you watch TV. Cable may not be on the verge of disappearing, but Comcast Corporation (NASDAQ:CMCSA) should be executing its own investment strategy to keep paces with coming changes. The potential that Verizon has at current levels makes it appropriate as a core holding in most portfolios.

The article Verizon’s Investment Strategy to Kill Cable originally appeared on Fool.com.

Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com, Apple, and Netflix.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.