Verizon's Shammo: We're interested in ad revenues, not unlimited data plans
Verizon CFO Fran Shammo put to rest any speculation that the carrier is planning to launch unlimited data plans anytime soon. But the nation's largest mobile operator appears to have unlimited plans for mobile video advertising.
U.S. carriers continue to experiment with "unlimited" data plans in an effort to grow their subscriber bases and maximize revenues in an increasingly competitive market (though, to be clear, most such plans allow around 20 GB of high-speed access before throttling users' speeds in some situations). Sprint and T-Mobile have long offered unlimited services, though both raised the cost of those plans in recent months. And AT&T earlier this year resurrected an unlimited offering but only for users who are also customers of its DirecTV service.
But Shammo said Verizon has no intention of competing in the unlimited arena. Instead, he said, the carrier plans to generate ad revenues through its Go90 offering.
"I've been pretty public saying the unlimited model does not work in an LTE environment," he told attendees at an investor conference today. "Unlimited is a very short-term game in the LTE market. Eventually unlimited is going to go away because you have to generate cash to reinvest."
So the operator plans to drive traffic to Go90, the OTT video offering it launched last year. Verizon recently began offering sponsored video through the service, allowing its subscribers to view content without incurring data charges, and it recently announced a joint venture with Hearst to create made-for-mobile content.
"The whole theory behind this, which we believe will win at the end, is to give all this content to the wireless customer for free, and we'll monetize it in a different way than having them pay for the consumption," Shammo explained. "But we also know that the consumer is going to have only so much wallet share for quote 'communications,' which wireless, broadband and cable fall into…. So we know that there's a limit. So we have to be able to have them consume more, but monetize that consumption in other forms. And that's how we got to the Go90 model, and that will be monetized through the advertiser and that will of course increase revenue and that will contribute to the bottom line."
Shammo also said Verizon is considering asset-backed receivable financing to get more cash upfront when customers finance their devices. The operator has $110 billion in debt and a dividend obligation, according to Bloomberg, and is expected to be an active bidder in the FCC's upcoming incentive auction of 600 MHz spectrum.
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