Verizon Data Share Plans to Usher in New Metrics to Measure Profits

By Michelle Maisto  |  Posted 2012-05-20 Print this article Print

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 €œdata 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 ARPU€”the average revenue per user that they bring in€”initiatives like Verizon€™s data share plans, which will be introduced this summer, will instead begin to necessitate a new metric, said Shammo.

€œIt really won€™t be a revenue per customer anymore, because if you think about the number of devices that will be added to these accounts, it really won€™t 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. It€™s 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, they€™ll buy bigger and bigger buckets, as it were.

€œThe 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 consumption€”because of the speeds and video consumption and other M2M-type [machine-to-machine] devices€”it 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 nation€™s largest carrier has one of the smallest smartphone user bases, still has plenty of room for ARPU growth.

€œWe still have, I would say, many, many quarters€”at least into 2013€”with 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. €œWe 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 hasn€™t said anything about but which everyone agrees will include LTE and be available from Verizon, among other carriers.

Shammo, speaking to Verizon€™s 4G LTE build-out, hinted that the device was imminent. Explaining that Verizon now has a €œsubstantial€ 4G footprint that will be completed by the end of 2012, and that by mid-2013 it may even exceed Verizon€™s 3G footprint, Shammo explained that its coverage is solid.

€œEven if you have an iconic device come out sometime this year,€ he said, €œwe are ready for that and we will be fine.€

Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.

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