Verizon Wireless Doesn't Have to Brag

CEO Dennis Strigl kept a low profile a the CTIA Wireless confab, but opened up to BusinessWeek Online about the industry and what's ahead

Verizon Wireless CEO Dennis Strigl never took the stage at the one of the wireless industry's biggest annual conventions, CTIA Wireless 2006, held in glitzy Las Vegas on Apr. 5-7. While his peers -- Cingular Wireless chief Stan Sigman and Sprint (S) COO Len Lauer -- stepped forward to discuss the state of the industry, Strigl remained in the background, meeting with customers and partners.

Even as handset makers such as Samsung announced new phones, and big brands such as Disney (DIS) revealed plans for new mobile services during the convention, the nation's second-largest and best-performing operator kept things relatively low key. Among the announcements Strigl greenlighted: An interactive multimedia experience for fans of The O.C., the hit TV series airing on Fox. Users will be able to watch the series, Atomic County, on V CAST, plus access insider video clips, ring tones and more.

Also, in a move that particularly excites Strigl, Verizon Wireless has expanded its navigation service to include its V phone. With VZ Navigator and V, customers can access such location-based services (LBS) as mapping and audible turn-by-turn driving instructions, and find more than 14 million points of interest.

In an interview with BusinessWeek's Chicago Deputy bureau chief and telecom writer, Roger O. Crockett, Strigl took time out from the conference to discuss his company and trends in the industry.

A few days ago, your parent Verizon Communications (VZ) announced a deal to shed some international assets. Was that deal driven in part by an effort to free up resources so that Verizon could attain full ownership of Verizon Wireless from Vodafone (VOD)?

No. The transaction was a long time in the making. We think it is a very good transaction. It enables Verizon to focus more on its key assets, which are Verizon Wireless, Verizon Telecom, and Verizon Business. It will provide an opportunity to pay down some debt as well as buy back some shares at the right time.

How important is it for Verizon to own all of Verizon Wireless now that AT&T (T) [formerly SBC] is gaining 100% control of Cingular, your biggest rival?

Verizon has stated that [Verizon Wireless] is important to them. But at the same time Vodafone has said that their piece of the asset is not for sale. So from Verizon Wireless' point of view, it puts us in a very enviable position: We have two owners who both love us.

Cingular [the largest carrier in the U.S.], as it integrates its networks is improving its performance and has your financial metrics as a target. How much do you worry about Cingular gaining ground?

Frankly, I am not focused on any of our competitors individually. What keeps us going is not beating our competitors but beating our own metrics. Our revenue growth is good. We added 7.5 million customers last year, far more than other carriers.

We have the most loyal customer base, as evidenced by our [low] churn rate. We have the highest cash flow margin in the industry. And we know that we have the most reliable network in the industry. So am I worried about others catching us? No, not if we can continue to improve our results every day in the marketplace.

But what about increasing your scale? It helps you gain leverage with your suppliers, right?

What matters it to be the best provider not the biggest. And with the over 50 million customers that we have today, we already have scale. Would 3 million more customers provide us with additional scale? Not really.

Tell me how the Motorola (MOT) Q phone is coming? Will you be selling the Q later this month?

We do intend to offer the Q phone. But no announcements as to when just yet. It's a very sleek, sexy device. I think there will be a good market for the Q phone and when we're ready we'll make the appropriate announcements.

What new services are coming next from Verizon Wireless?

As I walk the trade room floor [at CTIA], the most exciting application I've seen is music. There are 200 million wireless customers in the U.S. today. The opportunity we have to create value, to show them the ability to carry one device with their music on it, to download, as you can with Verizon wireless, to your computer and to your phone, or move your existing music to your computer and to your phone. I think we have a tremendous advantage. We announced this week that we have 1 million songs in our music library. I think we have a great opportunity to grow in music.

What about video? Do you expect your video application to mature, and how?

Yes, particularly with our partnership with Qualcomm (QCOM) on MediaFlo. Later this year we will be offering broadcast capability on our wireless phones and we'll do that in conjunction with MediaFlo.

Will it be available broadly across the U.S.?

It will be available in certain markets initially, and we will work it broadly across the U.S.

Will you tell me which markets? And when?

No. Stay tuned.

Can you tell us about a cool new product that's coming soon?

GPS-based systems that provide directions on your phone. This is something that we have been working on for a long time. Location-based services now provide us with a very good opportunity to do things like directions, fleet tracking, and, like Disney is doing, for giving parents the comfort and security of knowing where their children are.

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