Advertising, WiFi, Verizon, Van Wagner, and Pay Phones

What if you owned a bunch of real estate that you had no use for and couldn’t get rid of? If you’re like most of us that sounds like a dream, right? I’ll figure THAT problem out! But if you’re Verizon it’s a lot trickier.

Some years ago I did a stint at Verizon, where I was wrapped up in the “what do we do with our payphones?” question. The company installed WiFi at quite a few of the then-company-owned phones, but that wasn’t making any more money than the all-but-defunct coin phone business made.

For Verizon the problem was that it wasn’t making money off the phones any longer, but was obligated by tariff and also by the existence of long-term advertising contracts on the phone enclosures to keep the phones running.

Verizon’s solution was to sell or lease the pay phones to other companies. Problem solved.

One of those companies is spending a pile of money to give New York City free WiFi. And it really is free. Altruism? Of course not; you can count on Van Wagner selling advertising in their WiFi signals, and since Van Wagner is an advertising company it’s a good bet that they’ll succeed.

It’s a business change that makes sense, so long as Van Wagner can keep the antennas healthy and the web servers running. The latter is easy; we’ll see about the former. Verizon had a hard time with that part when they were giving away WiFi from the phone booths.

And it’s straightforward and honest, too. Starbucks gives away WiFi (also with embedded advertising, of course), in the hopes that you’ll hang around drinking expensive coffee. Van Wagner isn’t getting anything except that advertising revenue—and maybe a nice cozy relationship with the City of New York and Mayor Bloomberg.

It makes you wonder why Verizon couldn’t figure this out for themselves, doesn’t it?

As I said, I spent a few years working at Big Red. And I can tell you that they couldn’t do this kind of deal themselves because the department that controlled the advertising, the department that watched over the pay phones and their enclosures, the department that counted revenue from those phones, and the community affairs department didn’t talk enough or care enough about each other’s business issues to cooperate on what could have been a great opportunity. Even within the same company, coopetition wasn’t working.

Of course, that shouldn’t come as a surprise. The larger a company gets the more protective of individual fiefdoms its managers become.

Verizon is particularly dysfunctional in this regard. I learned about The Federal Subscriber Line Charge when I was at Verizon, and was encouraged to tell customers it was a tax (it isn’t) because marketing and operations couldn’t agree on how to talk to customers. It’s the reason Verizon’s customer service is such a mess. It’s why Verizon FIOS Quantum is being misrepresented.It’s why, back in the day when Verizon Wireless was still offering unlimited data plans, that data wasn’t really unlimited.

From a technical perspective I don’t believe the Van Wagner Advertising/City of New York/Verizon free WiFi initiative is going to actually work very well, but Van Wagner should win, and The City will win as long as it can claim to be giving away something of value. And that’s business change.

Real Estate people like to talk “Location, location, location”. This business change is about using your existing locations for something you han’t thought of before. Nice job, Van Wagner.

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