Verizon's Shammo: LTE enables new kinds of data plans
Verizon Wireless' (NYSE:VZ) LTE network gives it the ability to create new and differentiated kinds of data plans, including ones where content providers could pay Verizon to take their content out of a customer's data allotment, a senior Verizon executive said.
Speaking at the Barclays Global Technology, Media and Telecommunications Conference, Verizon Communications CFO Fran Shammo said that LTE gives carriers the ability "to price data many, many different ways." He was asked specifically about charging more or less for data depending upon the time of day or network utilization, and while Shammo did not address those two scenarios directly or say how Verizon might charge differently for data, he did mention the possibility of "toll free" data plans. Such plans, like toll free numbers, pass the cost of the connection from the user to a service provider.
"There's a lot of innovation that LTE brings to give us the ability to price data very differently," Shammo said.
Shammo also addressed his comments from last week about the carrier's forthcoming family data plans, or data share plans, which Verizon will launch this summer. Shammo said he misspoke slightly, noting that customers will have the choice to upgrade to such plans. However, he reiterated his point from last week that if customers on unlimited data plans move to data share plans, they will lose their unlimited pricing.
"If you go to data share, you can't intuitively have an unlimited plan if you want to go to data share," he said, noting that the company's market research has shown that customers want such plans. He did not provide details on Verizon's planned family data plans, but said, "I think it's going to be different and innovative for the industry."
The Verizon CFO also talked about the carrier's pending purchase of $3.9 billion worth of AWS spectrum from a group of cable companies, as well as the company's proposed sale of 700 MHz Lower A and B Block spectrum. Verizon has said the sale of its 700 MHz spectrum is contingent on getting federal approval for the AWS purchases. Verizon noted in a recent FCC filing that it has attracted 36 possible bidders for the 700 MHz licenses.
"At the end of the day, this is not a fire sale," Shammo said of the 700 MHz spectrum. "This is a fair market value sale. It will be our discretion, if we don't believe we're getting the value then we won't go ahead with the sale."
According to Credit Suisse, Verizon will auction 24 12 MHz A Block licenses covering 152 million POPs and 54 12 MHz B Block licenses covering 48 million POPs. Verizon spent a total of $9.36 billion on its 700 MHz spectrum during the FCC's 2008 auction, with around $4.4 billion of that going to A and B Block licenses.
In December, Verizon agreed to pay $3.6 billion for the nationwide AWS spectrum licenses held by SpectrumCo, a joint venture of cable companies Comcast, Time Warner Cable and Bright House Networks. Separately, Verizon said it will buy Cox Communication's 20 MHz of AWS spectrum covering 28 million POPs for $315 million. All of the deals include the option of Verizon reselling cable services and cable companies reselling Verizon service. The cable companies can also become MVNOs of Verizon.
Shammo said that the AWS spectrum Verizon wants to buy fits better with its existing spectrum holdings and will serve as a capacity overlay to augment its 700 MHz Upper C Block spectrum, which Verizon is currently using for its LTE network. He said there are other companies that could make better use of Verizon's A and B Block spectrum.
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