Verizon Wireless (NYSE:VZ) launched a promotion doubling the amount of data its LTE smartphone customers get because it makes sense for the company financially and allows Verizon to get more subscribers off its EV-DO network and onto LTE, according to Verizon Communications CFO Fran Shammo.
Speaking at an investor conference Wednesday, Shammo said the promotion, which started Tuesday and will run through the holidays, is "beneficial from a financial standpoint," especially in terms of saving on capital expenditures to add capacity to its EV-DO network.
Shammo said that Apple's (NASDAQ:AAPL) iPhone is doing very well for Verizon, but that it puts capacity pressure on the company's EV-DO network. He said Verizon's goal is to maintain a high-quality experience on the legacy network.
"So, in order for them to keep that realization of that experience, we need to make sure that I don't have to put in any more capacity to 3G, so in essence, what we are doing is we are enticing people on a Droid handset to move to a Droid handset on 4G," Shammo said, according to a transcript of his comments provided by Verizon.
The promotion is timed to coincide with the launch of the LTE-capable Motorola Mobility (NYSE:MMI) Droid Razr, as well as the HTC Rezound and Samsung Galaxy Nexus, which are also LTE Android phones. "So the theory behind this was to entice the users to move to 4G to free up the capacity for the iPhone, so that I don't have to continue to invest in the 3G network," Shammo said.
Under the promotion, which applies only to LTE smartphones, customers who sign up for a 2 GB plan for $30 will get 4 GB per month, those who sign up for a 5 GB plan for $50 will get 10 GB and those who sign up for a 10 GB for $80 will get 20 GB. Verizon will also offer a 300 MB plan for $20 for basic phones as well as 3G and LTE smartphones as a promotion. All new customers who purchase an LTE smartphone are eligible for the double data plans, and existing customers who have upgraded their service or purchased an LTE smartphone within the past 14 days will be eligible for the double data plans. Once a customer has the plan, they can keep the plan as long as they are on an LTE smartphone.
Verizon's promotion could also be a way to counter rival AT&T Mobility (NYSE:T), which just launched its first two LTE smartphones, the HTC Vivid and Samsung Galaxy S II Skyrocket. Shammo said Verizon intends to accelerate its LTE deployment as much as possible so that "the customer experience on that network is at the 4G level and doesn't continue to go between the 3G and 4G network."
"But we are accelerating that as fast as we can because we see the expense benefits, the operating benefits, the efficiency of the network," he said. "The more we can get over to that network, the more beneficial it is for us."
- see this Bloomberg article
- see this Verizon transcript (PDF)
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