Verizon will probably begin offering LTE-only phones to consumers “more toward the end of 2016,” but the company has no plans for now to lease phones as rivals Sprint and T-Mobile do with select models, CFO Fran Shammo said during an investors’ conference call.
Shammo also said he expects rivals T-Mobile and Sprint will start focusing more on return and profitability rather than low pricing. “You can only price down so much,” he said, citing a need to invest in networks to maintain quality as data traffic surges.
Although T-Mobile and Sprint have turned to phone leasing to reduce the monthly payments for select phones, Shammo said Verizon isn’t interested for now in leasing phones. He cited a balance-sheet risk that comes from not knowing what the residual value of the phones will be when a carrier takes the phones back after a lease expires. He also said he is not seeing competitors’ leasing plans eat into Verizon’s customer base.
As for LTE-only phones, carriers are looking to them to conserve network bandwidth and expand capacity. On Verizon’s network, LTE-only phones would dispense with circuit-switched CDMA voice technology, replacing circuit-switched calls with more spectrum-efficient IP-based Voice-over-LTE (VoLTE) calls. With or without CDMA, VoLTE-equipped phones also deliver Rich Communications Services (RCS) over VoLTE, such as placing video calls just like standard voice calls without launching a third-party app. RCS messaging services include near-real-time chat, being able to see what others are typing, getting notified that a message has been read, and sharing high-res photos and videos up to 10MB as if sending a regular text message.
During the call, Verizon also revealed that it gained 1.29 million net postpaid phone and tablet subscriptions in its fiscal third quarter, down 15 percent from the year-ago quarter. The gain came mostly from the addition of 818,000 tablet net adds compared to 430,000 phone net adds.
The number of retail prepaid subscriptions fell by 80,000.
Prepaid net additions were down 14.5 percent for the nine-month period to 3 million.
Wireless operating revenue was down 4.1 percent to $17.6 billion, but wireless operating income was up 10.3 percent to $7.67 billion. Wireless revenues were up 5.4 percent to $23 billion.