Verizon to spend $500 Million, to Keep Up with Video Demand
Verizon Communications (NSYE: VZ) will have to spend a lot of money if it wants to keep video-loving customers happy.
The Wall Street Journal reports the telecom will have to spend hundreds of millions of dollars to keep its 4G network running at top speed.
The biggest problem facing Verizon is falling 4G Download speeds. Analysis firm RootMetrics estimates that 4G downloads speeds from Verizon have fallen by 20 percentin the last year in some cities.
Even Verizon Wireless CEO Lowell McAdam admitted some of the company's hotspots aren't performing at top speed.
There are also slow speed issues in some of Verizon's biggest markets, including New York, San Francisco and Chicago, apparently caused by congestion. Download speeds have fallen by 29 percent in San Francisco and 15 percent in Chicago, according to RootMetrics.
Slow 4G an Industry-Wide Problem
Speeding up 4G is one of Verizon's priorities, but it won't come cheap. The Journal says it will cost the telecom $500 million to fix the problem in coming months. The cause of the problem is the increased downloading of video over 4G.
But Verizon isn't the only company faced with this problem, AT&T is also creating a plan to deal with the growing problem. AT&T now estimates that 50% of its wireless traffic is video.
The bad news about video is not hurting Verizon's share price, however. Verizon shares were up .43 percent in afternoon trading on Friday. The market seems to believe that Verizon will be able to fix this problem.
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