Verizon Makes Changes to Data Plans as iPhone Arrival Looms
Verizon Wireless has been preparing to launch a Code Division Multiple Access version of the Apple iPhone for nearly as long as consumers and the media have been speculating that the carrier would offer one, executives said during the carrier's fourth-quarter earnings announcement.
"We've been preparing the network for expansion for the last year, anticipating the launch of the iPhone," Verizon CFO Fran Shammo said during the carrier's Jan. 25 earnings Webcast. "So we are well-prepared from a network perspective."
Verizon could use the boost the iPhone is promising when the wireless company starts selling it Feb. 10. Verizon announced revenue that, at $26.4 billion, came in shy of Wall Street expectations. In addition, Verizon saw a dip in the number of wireless customers it added during the quarter-signing up 955,000 subscribers, compared with the nearly 1 million it added the quarter before. Profit for the quarter increased to $4.65 billion from the $2.37 billion a year earlier.
The company is making some changes that will affect not only the iPhone, but other smartphones in its lineup as well. Verizon COO Lowell McAdams said the company is ending its monthly $15-for-150MB data plan and, instead, forcing all users to adopt its $30 unlimited plan. However, later on Jan. 25, Verizon officials reportedly backpedaled on that, saying the for iPhone users, that unlimited plan is temporary. After an as-yet-undefined period, the iPhone users will go on a metered plan, similar to that found at AT&T, which until Feb. 10 holds exlusive rights to the iPhone.
In addition, as has been reported, the carrier is canceling its "New Every Two" program for new customers. The program formerly offered an incentive credit of $30 to $100 toward the purchase of a new phone and contract every two years.
"You can do the math," said Shammo. "Before, you would get a $50 to $100 credit going forward on any upgrade. That disappears. The customer will be getting the promotional price at that time for a new phone, if they qualify."
Verizon also is changing its return policy from 30 days to 14 days. And finally, it's launching a trade-in program about which it plans to offer more details in the coming days. In short, however, it has entered into an agreement with a third-party company that will be accepting subscribers' old devices.
"We will be taking trade-ins from anyone who wants to bring us a trade-in phone. They will be getting credit from the third-party participant, and then we will welcome them into any device that they choose on the Verizon network," said Shammo.
The iPhone's effect on Verizon's bottom line going forward will be dictated by three factors, Shammo said: device supply, "the mix of sales vs. upgrades" and Verizon's projection as to how many iPhones it expects to sell.
"I'm probably going to disappointment everyone," Shammo added, "but I'm not going to give you an exact forecast that Verizon has for the iPhone because there are too many variables that go into it."
Verizon has had the relative benefit and learning experience of watching competitor AT&T work to support the iPhone and its subscribers. AT&T has had the exclusive rights to the iPhone since its original launch in 2007, which resulted in a redefinition of the wireless ecosystem that at times left AT&T struggling and its subscribers grumbling.
"We are not going to have any flaws on the execution of the iPhone launch," said Shammo, detailing the ways that the carrier has prepared for the device. Not only has it hired and trained more than 3,000 customer-service representatives, but even its decision to offer the Apple iPad, said Shammo, was a strategic move toward preparing for the likely more overwhelming sales of the iPhone.
"If you think about it, we've launched the iPad so that our customer-service reps in our stores and in our centers could get used to the interface of the iPhone. [It] was a pre-launch to the iPhone," he said. "So we've trained everyone-there's been extensive training around that."
Shammo was joined on stage at the earnings announcement event by McAdams and CEO Ivan Seidenberg, who encouraged the investors present to patiently take note of what happens during the first half of 2011 before offering guidance on Verizon's 2012 and 2013.
"Don't just focus on the iPhone," said Seidenberg, "but look at the breadth of our assets."
Noting that Verizon has been working to grow out its 3G, 4G and FiOS fiber-optic networks, and that it has big plans for moving into "the cloud space," Seidenberg said that while he has no great hope of helping out his competitors, all these things will work to benefit the wireless industry as a whole.
"We believe the investments we're making," said Seidenberg, "will grow the pie.