Lowell C. McAdam
Chairman and Chief Executive Officer
140 West Street
New York, NY 10007
Dear Mr. McAdam,
I can’t understand your strategy behind pushing Voice Link as a replacement for landline wireless. It seems to be a major misstep, of the kind that should lead prudent investors to short Verizon.
I understand that your revenue from traditional landline services has declined. As you sell it today, copper landline service is mostly noncompetitive with the alternatives, and that has hurt its market share in your service area. But that’s not the whole story.
Yes, copper landlines come with many regulatory restrictions, require considerable maintenance, and do not support competitive broadband data speeds. From a consumer point of view, they only work in the home and they’re expensive.
But, from Verizon’s point of view, I think you’re missing something important: Copper landline technology has a substantial benefit that differentiates it from all of your competitors, a benefit Verizon has failed to market properly.
Or, at least, it used to be reliable; in your service areas, your failure to maintain copper plant and infrastructure has weakened that reputation considerably… but it can still be regained.
With a copper landline, properly implemented and maintained, service remains up until the line is severed, and that generally takes considerable damage. If commercial power is out, landlines generally remain up. If you need to call 911, it’s going to work best from a landline, which will have the capacity and power to complete the call, and will reliably connect you to the correct PSAP on the first try, with accurate location data even if you can’t speak. If you need a medical alert device, a landline is the most likely to work when you need it. It won’t turn out not to have a generator, or be overloaded by many calls, or fail due to radio interference. It doesn’t depend on having commercial power to the home to charge batteries or power base stations.
In short, the key differentiator of the venerable copper landline is that it’s suitable for life-critical communications.
Consider: Once you transition a customer to Voice Link, they are now on your wireless service. That’s a commodity product, and it lacks that key differentiator. For a consumer, Voice Link is not substantially different from AT&T’s fixed-wireless service available at Target, or similar offerings from Sprint, T-Mobile, or their MVNOs. It’s also not substantially different in terms of reliability or price from numerous VoIP providers.
By moving people to Voice Link, you’re inviting them to drop Verizon entirely and move to competitors that offer the same service with better features or a better price… because you can’t use your key advantage, the unmatched reliability of a regulated copper landline.
Investors should shy away from companies that willingly surrender a key market differentiator in the name of short-term profit.
Already, Verizon has surrendered the Internet market to its cable competitors by abandoning FiOS. Verizon’s DSL offerings are pathetic compared to cable’s low-cost, high-speed Internet; fixed wireless LTE is so expensive that it’s solely a last-choice alternative.
I am currently a Verizon landline customer. I pay for the service because I value the reliability, even though Verizon’s landline service costs more than a VoIP line even without services now seen as basic, free features on every competing technology: caller ID, call waiting, voicemail, unlimited long distance… If Verizon were to stop providing this landline service, I would not purchase Voice Link. I would move to one of your competitors, where I would get a better value for less money.
My advice to you: Abandon Voice Link as a replacement for copper landlines. Market it as a low-cost alternative for those who need seasonal service, or service where installation of the last mile would be prohibitively expensive to the customer… or as an additional-line alternative to VoIP. Reinvest in your copper landlines to restore their reliability. Market that reliability heavily. Bring the feature set of a basic $35 landline in line with that of a $20/month prepaid cellphone: caller ID, call waiting, and basic voicemail at no additional charge. You can then use affinity programs to sell landline consumers on your wireless offerings by providing a discount.
The alternative—eliminating your inherent competitive advantage, the last advantage of the old Bell monopoly you’ve been allowed to retain—makes no business or social sense.
Robert A. Levandowski