Verizon Wireless Targets Growth In New Services

Phones “almost fully penetrated,” executive says
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Palm Beach, Fla. – Verizon Wireless is looking to new services to fuel growth, including connected-car technology, over-the-top video services for mobile devices, and the Internet of Things (IoT), Verizon Communications EVP/CFO Fran Shammo said.

LTE-connected tablets are will also “be a very strong growth engine” for the carrier in the next few years, he told analysts here at the Deutsche Bank Media, Internet & Telecom Conference.

The carrier is expanding its opportunities “because the mobile-phone [net] add is going to be a very competitive-type environment,” he said. “It’s almost fully penetrated at this point for us.”

The company still has some basic-phone and 3G-phone users, “so we have an opportunity to upgrade them, but that opportunity is dwindling very fast, and that will probably be gone by the end of this year,” he said.

As a result, “we have to look at these other avenues of growth,” he said, pointing to almost $600 million in annual revenues from IoT connections. In the next two months, the company will roll out its previously announced subscription-based Verizon Vehicle telematics service for aftermarket sales. It will be available initially through VerizonVehicle.com and 800-711-5800. The service, an over-the-counter Bluetooth speaker, and GPS- and cellular-equipped OBD reader will roll out through nationwide retailers late in 2015, the company previously said.

The service provides GPS-based roadside-assistance and emergency services with two-way voice, stolen-vehicle tracking, and vehicle-diagnostic updates and service reminders.

In the summer, Verizon will launch its mobile-first video service, presumably via one-to-many LTE Broadcast technology.

With such opportunities, the “pie expands enough for all four carriers to expand,” he said.

In other comments, Shammo discounted the competitive potential of future cable-operator cellphone services that primarily use Wi-Fi for voice and data but fall back to cellular between Wi-Fi networks. These systems, Shammo said, do not provide a “seamless flow of going between Wi-Fi and LTE. They do not deliver “a quality of service that most of our wireless customers would like.”

LTE networks , he noted, are “managed” networks, whereas Wi-Fi networks are not. Wi-Fi network performance degrades quickly when loaded with a lot of users and will degrade further when voice calls are added, he said.

In contrast, Verizon is looking at unlicensed LTE technology to add capacity to its network. LTE in unlicensed bands, when combined with licensed LTE, can be managed, he said.

Cable companies’ “Wi-Fi-first” services will “not be a replacement for LTE,” he concluded.

On another topic, Shammo expects the participation rate in its Edge installment-plan program to continue growing. Competitors are actively promoting their own versions of these plans, which charge an unsubsidized price for a phone, so they can advertise the lower monthly service fees that come with them, Shammo said. As a result, Verizon has to advertise Edge more heavily to compete, he said.

In the fourth quarter, 24 percent of postpaid phone purchasers selected an installment plan, and he expects that to grow to about 35 percent in the first quarter. He said he wouldn’t be surprised if the rate continues to tick up during the rest of the year.

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