Verizon Data Share Plans to Usher in New Metrics to Measure Profits
NEWS ANALYSIS: Verizon’s data share plans will arrive this summer and encourage a new revenue metric for the industry, said CFO Fran Shammo, measuring revenue by multi-device accounts, not users. Shammo added: Verizon’s LTE is ready for an "iconic device."
Verizon Wireless upcoming data share plans are indicative of the broad changes taking place in the mobile market and in how Americans interact with devices. These changes, Verizon CFO Fran Shammo said during a hosted conversation with JP Morgan Chase analyst Phil Cusick, at a JP Morgan conference May 16, are even set to change the way wireless carriers measure their success.
While Verizon and other carriers are in constant discussion of their ARPUthe average revenue per user that they bring ininitiatives like Verizons data share plans, which will be introduced this summer, will instead begin to necessitate a new metric, said Shammo.
It really wont be a revenue per customer anymore, because if you think about the number of devices that will be added to these accounts, it really wont be important anymore what the revenue per customer is. It is going to be the revenue per account, he explained, according to a transcript from Thompson Reuters.
Individuals, families and small businesses will all eventually be moved onto tiered data share plans, on which multiple devices will sip from a single bucket of allotted data, according to Shammo. In some ways, it may be more efficient, allowing, for example, low- and high-data users in a family to balance each other out. Its also more likely to get more users connecting tablets to 4G, instead of just relying on WiFi, as the majority now do.
As Long-Term Evolution (LTE) technology is available in more markets, and people become accustomed to its speed, theyll buy bigger and bigger buckets, as it were.
The important part of this is we want the connections to come in, and the way we have designed our plan [is that it is] built on tiers, and as we look at the future growth of LTE consumptionbecause of the speeds and video consumption and other M2M-type [machine-to-machine] devicesit is going to be more important that people will start to upgrade in their tiers as they start to really realize the benefits of the LTE network.
Until that time, Verizon, which despite being the nations largest carrier has one of the smallest smartphone user bases, still has plenty of room for ARPU growth.
We still have, I would say, many, many quartersat least into 2013with our basic-phone-to-smartphone upgrade, because we have a fairly low base of smartphones still, compared to the rest of the industry, Shammo said. We are coming out of the first quarter at 47 percent [smartphone penetration] ¦ so we still have a long road ahead of us there.
Helping hurry Verizon down that road will be the next Apple iPhone, which Apple hasnt said anything about but which everyone agrees will include LTE and be available from Verizon, among other carriers.
Shammo, speaking to Verizons 4G LTE build-out, hinted that the device was imminent. Explaining that Verizon now has a substantial 4G footprint that will be completed by the end of 2012, and that by mid-2013 it may even exceed Verizons 3G footprint, Shammo explained that its coverage is solid.
Even if you have an iconic device come out sometime this year, he said, we are ready for that and we will be fine.