Verizon, Comcast customer data to transform ad markets: reports

"Verizon's next big growth engine is data," writes veteran telecom analyst Craig Moffett, in a report today to clients of MoffettNathanson Research. He's talking about Verizon's "'free' Go90 video (by smartphone) service." In this program which enables the company to track both video use and customer GPS locational data, among other user info, Verizon is giving us "a rather startling strategic insight into the company's longer-term sources of value:... its vast trove of information about the comings and goings of its100 million wireless uers."

This isn't (just) about convincing young people to replace cable with handheld video: "Their goal is to reinvent the advertising business." Because Verizon's real asset base is you: "Imagine a world where Verizon can deliver to an advertiser a list of all users who have actually set foot inside an auto dealership in the last 24 hours... No one else can deliver that level of granularity and richness."

Separately and similarly, "Comcast Corp. is sitting on a potential treasure trove of data on how Americans watch TV," writes the Wall Street Journal here (paywall). "The cable giant is working to unlock that information in ways that it hopes could save the $70 billion U.S. television advertising market" using set-top-box data, sorting, transmission. 

Yes, there are obstacles: Privacy, if regulators and consumers decide that's a big problem. And Google, which has a head start. But "Verizon's emerging customer information strategy" promises to "disrupt... traditional video... and create an entirely new business," something phone giants haven't done since, well, early cellphones, Moffett concludes.

Just in time, he adds, since the quality of wireless-phone-company financial reporting, with all the confusion over who collects and controls phone sales and lease income over time, is now "shockingly poor" for Verizon and its rivals. Moffett prefers Verizon to AT&T.

It's the reverse pick for analyst Kevin Smithen at Macquarie Securites. In a report Wednesday he urges clients to "resist the temptation to buy Verizon at current levels." He's predicting unpleasant future profit surprise: "In the big picture, we don't see the need to own a company" whose profits (non-financial) are "86% expose(d) to U.S. wireless, in a four-player market, with collapsing (revenues) across the industry," and needing a lot more broadcasting spectrum to grow. "We continue to prefer AT&T." 

And at Bernstein Research, analyst Paul de Sa is taking a little longer view: Go90 and other "new growth initiatives" make this an "Outperform" stock over the next year.