Internet Outages, Verizon and Value: The Information’s Tech Briefing

If you’re on the East Coast, you might have experienced the internet outage this morning that played havoc with Zoom calls, Gmail and other everyday working tools. Unlike previous outages, this wasn’t caused by a cloud provider like AWS or a specific application like Slack but by Verizon, which owned up to a “fiber cut” in Brooklyn. It’s a reminder of the critical role played by telecom giants like Verizon in keeping people online, despite getting very little love from investors.

Check out Verizon’s stock price, which over the past five years is up about 40%, compared with the S&P 500’s roughly 100% rise. That makes sense from one perspective: Verizon’s revenue hasn’t grown over the past few years, as its fourth quarter results today demonstrated. That’s a sign of the saturated nature of the cellular market. From another perspective, the actual value to society, Verizon may be a little underrated. Consider that Verizon spends nearly $20 billion a year maintaining its network. In the nearly concluded spectrum auction, Verizon may have spent as much as $40 billion to bolster its access to airwaves valuable for 5G, MoffettNathanson analyst Craig Moffett estimated in a report today. That’s enough to put a dent in its balance sheet.