Seidenberg: Apple TV Jump Shows World Without Walls
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here is no longer a "telecom" industry, according to former Verizon Communications (NYSE:VZ) chairman and CEO Ivan Seidenberg, who says
"the walls between telecom, technology, media and entertainment have collapsed," as evidenced by Apple's expected jump into Web TV.
"All worlds have converged," said Seidenberg, now an advisory partner at financial services firm Perella Weinberg Partners.
He says Internet-based, consumer-facing firms such as Amazon.com and Google are the wave of the future and could threaten financial service companies. Seidenberg stepped down as Verizon CEO in July 2011.
Ivan Seidenberg, former chief executive officer of Verizon Communications
Ivan Seidenberg, former chief executive officer of Verizon Communications View Enlarged Image
"The world without walls is now producing the kinds of combinations that were once just a futurist's fantasy: Apple (NASDAQ:AAPL) moving into the TV business, Google jumping into mobile, broadband and media, Verizon combining with AOL and, of course, Comcast (NASDAQ:CMCSA) merging with NBCUniversal," said Seidenberg in an article written for PWP.
Verizon in June acquired AOL for $4.4 billion.
"Across the industry, traditional telecom and tech companies are teaming up with content creators as content searches for direct and efficient distribution to a mass consumer audience. Telecom companies have invested billions to make broadband ubiquitous and they're monetizing that investment by filling the pipes with as many sources of content as possible. This high-margin play delivers good value for investors," said Seidenberg, who left Verizon's board of directors in December 2011.
Seidenberg's legacy includes building out Verizon's "FiOS" fiber-optic network, taking on cable TV firms with video and broadband services.
Seidenberg also expanded Verizon's wireless business. Though Vodafone Group (NASDAQ:VOD) won a high stakes bidding war for AirTouch in 1999, Verizon and Vodafone formed a wireless joint venture.
After Seidenberg left, Verizon in 2013 agreed to buy out Vodafone's 45% stake for $130 billion.
One of Seidenberg's questionable decisions involved negotiations with Apple over the iPhone. AT&T (NYSE:T) became the first wireless firm to sell the iPhone in 2007, giving AT&T a major boost.
"Between hardware, software and connectivity, companies can gain access to the consumer without needing the middle man," Seidenberg wrote in the article. "Technology enabled Netflix (NASDAQ:NFLX) to create a new distribution channel, bypassing movie theaters and television networks to deliver content right to the end consumer."
Financial services firms "live in fear" of what the trend may mean for their industry, he added.
"Amazon (NASDAQ:AMZN), eBay and Google (NASDAQ:GOOGL) threaten banks as the lenders of the future. If you're a small business and need a loan to purchase more inventory and scale your operations, you don't have to go to a bank — you can go to Amazon or PayPal (NASDAQ
YPL)," Seidenberg wrote. "This disruptive dynamic impacts every industry. Every big, incumbent institution should be aware of this ... and fear it."
