Verizon Admits LTE Network Bogging Down in Cities: Report

CFO Shammo says Verizon's LTE network is experiencing capacity constraints in big cities, but by 2014 it'll be back on top.

Verizon CFO Fran Shammo says the carrier's Long Term Evolution (LTE) network is starting to feel the crush of users' growing data habits.

Shammo spoke to investors at the Wells Fargo 2013 Tech, Media and Telecom Conference in New York Nov. 12. Cnet was first to report the rare acknowledgment that the nation's largest LTE network is anything but endlessly robust.

"There are certain pockets where we're absolutely going to experience that downtick from the LTE network down to 3G because of capacity constraints," Shammo said, according to Cnet.

Verizon's wireless network is feeling most pressured in big cities, said Shammo, including New York and San Francisco.

During Verizon's Oct. 21 earnings call, Shammo said that Verizon is continuing to build out its LTE network, which is now in 165 markets, covering 186 million people.

"With additional markets planned in November and December, we are actually ahead of schedule and have already exceeded our year-end target of 185 million [people]," Shammo said during the earnings call.

He added that 52 percent of the carrier's new retail postpaid devices were 4G LTE smartphones—up from 30 percent the quarter before—and that Verizon sold 1.4 million LTE devices during the third quarter.

Shammo also celebrated the move of more customers from its 3G to 4G networks.

"If you look at our Internet devices, about 95 percent are all now 4G LTE, and that's a big deal for us, because that means we are now moving high-end users on MiFi and dongles off of the 3G network on to 4G, which obviously frees up spectrum and reduces our capital expense," he told analysts.

At the Wells Fargo conference, Shammo insisted that the build-outs still to come this year will help ease the strain. "By the end of this year, you are going to see all those issues dissipate," he said, adding that in 2014, Verizon will be "ahead of the curve again."

Mobile Traffic Growth

Verizon isn't alone in seeing data consumption figures rise.

Mobile data traffic rose 10 percent between just the second and third quarters of 2013 and rose 80 percent between the second quarters of 2012 and 2013, Ericsson said in its latest Mobility Report. By 2019, it forecasts mobile data traffic to increase to 10 times the current figure.

The primary driver of this growth will be video. Video traffic is expected to grow 55 percent annually through the end of 2019 and then account for more than 50 percent of global mobile traffic.

Ericsson also found data use to vary by smartphone operating systems.

"The largest average traffic volumes per subscription are measured on Android smartphones that use up to an average of 2.2GB per month," said the report. iOS devices were found to use an average closer to 1.7GB each month, followed by Windows Phone devices, at 1.5GB.

More than 50 percent of the smartphones Verizon sold during the third quarter were Android, while 35 percent were iPhones.

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