Verizon-4G-LTE

Verizon’s CFO Predicts End of Phones Subsidies and LTE-Only Devices

March 5, 2013 - Written By Norman Yan

Verizon’s CFO Fran Shammo has made some bold claims during the Deutsche Bank 2013 Media, Internet & Telecom Conference in regards to the future of Verizon. He predicts that by 2014 all phones sold by Verizon will be LTE only due to the introduction of their new voice over LTE which will begin its role out late this year or early next year. The new system will make the need for its current CDMA network redundant for new phones, since they will be able to use the high speed 4G network and the improved voice quality as a result of the greater bandwidth that can be provided by LTE. Shammo also notes how phones that only use LTE will be cheaper than current phones because devices will no longer have to have a both a LTE and CDMA chipset within the device only requiring the former, thus lowering manufacturing and testing costs for device makers, which will then be passed on to the consumer. The end result phones that only support 4G LTE at a lower price point than current phones that support CDMA and LTE.

Fran Shammo has also made some observations about the device market in general, predicting that “over the next two to three years subsidies will start to decrease just because of the ecosystem”.Currently many carriers offer subsidies with their phones where customers buy a contract and get given a phone to use for the duration of the plan, but Verizon’s planned move away from carrier subsidies won’t make them the first company in the world or even the USA to adopt this new market strategy with T-Mobile already executing their plans to only offer value plans. While this means users will end up paying more for their phones upfront, the overall costs could prove to be lower. The benefit of carriers not having to subsidies phones is lower costs for the carrier which will translate to lower costs for respective plans since carriers no longer need to make their money back through the life of the contract by internalizing the costs. That means users will be able to pick the phone they want and a contract that matches their usage pattern instead of having to buy a contract that offers many unused options because carriers only offer the phone they desire on the high-end contracts, so now users can choose to mix and match the contracts and phones they want instead of having to make a compromise between the two. Overall this could lead to savings for the end-user, however that depends on usage patterns of the individual.