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Verizon Wireless Distance Themselves From Price War And Rollover Plans

January 22, 2015 - Written By David Steele

Rollover plans seemed like a great idea when AT&T introduced them in 2007. Any unused allowance from one month may be rolled over into the following month, often with some limits and caveats. In some markets, rollover plans come and go and are seen as something of a fad, including Verizon Chief Financial Officer, Fran Shammo. Verizon didn’t follow AT&T in 2007 and are (probably) not going to follow in 2015. In an interview, he explained that Verizon is a leader and not a follower and has no plans to “go to places where we did not financially want to go to save a customer.” He admitted that there will always be customers that will leave based on price and that Verizon had no plans to compete on price alone as this did not make good business sense. The interview follows December’s launch of the Data Stash rollover scheme by T-Mobile, which was quickly followed by a similar offer from AT&T. And these copycat offers followed a year of fierce competition between the US carriers, or in the case of T-Mobile USA, the un-carrier.

He also spoke of the rumor that Google was to start reselling either Sprint or T-Mobile US’ wireless service, now confirmed as being with Sprint. At the time, Fran said that Google offering a wireless service was an example of the search giant stirring the pot, in a similar fashion to Google Fiber being a means of encouraging the competition to offer higher broadband speeds. Google’s entry into the wireless service market would be a means of encouraging competition, but he refused to be drawn into speculation concerning how Google might make this work until he had seen the business plans. He did explain that Verizon has seen wireless resellers “come and go” in the last fifteen years and conceded that Google could bring price disruption into the sector.

Verizon’s stance on price competitiveness shows that the business appear to be drawing a line in the sand to try to distance themselves from the unpleasantry of the price war. Big red’s fourth quarter 2014 earnings showed strong subscriber growth but an uptick in customer turnover, or churn, and reduced margins owing to competitive pressures. They’re going for quality over quantity, keeping churn rates down. And they are right to do so: loyal customers are sticky customers, that is, they tend to stick by their preferred carrier through thick and thin. This is good for ARPU, Average Revenue Per User, which is one of the favourite metrics that investors like to value a wireless carrier by. Ultimately, happy and loyal customers make for happy and loyal shareholders.