Verizon Wireless plans to launch Wi-Fi calling in mid-2015
Verizon Wireless (NYSE: VZ) plans to introduce Wi-Fi calling in the middle of next year but does not see an urgent need for it, according to Verizon Communications CFO Fran Shammo.
Speaking at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference, Shammo noted that Apple's (NASDAQ: AAPL) new iPhone 6 and 6 Plus support Wi-Fi calling. He said Verizon needs to do "some technological work in our network to make it available," and it should come around the middle of next year.
However, he said Wi-Fi calling was "never a top priority" for Verizon. "We built our voice platform so extensively [that] there was never a need for us to tell our customers, 'Oh, our network is not good enough so you need to go on Wi-Fi to complete your call.'"
He noted that when a call goes onto a Wi-Fi network, it's difficult for Verizon to guarantee the quality of service on that call, which is what Verizon has built its brand reputation on. That's a major reason Verizon waited so long to launch Voice over LTE service--it wanted to make sure it had adequate coverage that could replicate the voice experience of calls on its 3G CDMA network. Verizon has just started rolling out VoLTE service.
Other carriers are moving ahead with Wi-Fi calling plans. Ralph de la Vega, CEO of AT&T's Mobile & Business Solutions Group, said last week that AT&T will launch Wi-Fi calling in 2015 but that the carrier will use it only as a complement to Voice over LTE or 3G-based calling. "We don't have this burning desire" to use it to enhance coverage, he said.
The comments were notable in light of T-Mobile US' (NYSE:TMUS) announcement this week that heavily emphasized Wi-Fi calling and using personal routers to create Wi-Fi coverage areas in subscribers' homes. T-Mobile is the first and only U.S. carrier to support Wi-Fi calling on the new iPhone. Sprint (NYSE: S) also launched a Wi-Fi calling service for its Android smartphones this past February.
In terms of other hot topics, Shammo said Verizon would not be leasing phones, as Sprint is doing with its "iPhone for life" offering with the new iPhones. Under that program, individual customers will pay $20 a month for a 16 GB iPhone 6, instead of $30 under normal financing. At the end of 24 months, they can trade in their iPhone for a new iPhone. The iPhone 6 Plus will cost $25 per month under this program instead of $35 under normal financing. If a customer wants an iPhone with more internal storage they will pay more per month. The leasing program applies to families as well.
Shammo said Verizon offers its Edge handset-financing and early-upgrade program but that the "majority" of Verizon customers are still choosing subsidized handsets paired with two-year contracts. In contrast, AT&T said sales through its similar Next program represented around 50 percent of all smartphone sales in the second quarter.
Shammo also touched on whether Verizon might sell its wireless-tower assets, saying the company remains open to it. In the past, doing a deal "always came down to price and terms and conditions," which he said have become more favorable. He said that Verizon's network is experiencing high demand and that the company would like to retain the flexibility to add towers or add network gear to existing towers. "It's an option for us," he said. "We continue to look at it, and we'll see what happens."
Last week at a separate investor conference, Verizon Communciations CEO Lowell McAdam also said the company would be open to selling some of its towers if the price was right. "Those deals are coming to us a little more now, and if an opportunity presented itself to increase shareholder value" Verizon would be interested in pursuing it, McAdam said, according to Reuters. McAdam said Verizon received interest in its towers two years ago, but the bids weren't high enough.
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