Factors are aligning for Verizon to get consumers on board with 5G ahead of C-band activation later this year, including new smartphone promotions aimed at upgrading its base while also attracting new customers.
Accelerated 5G adoption underpins the carrier’s overall strategy for growth over the next few years and Ronan Dunne, group CEO of Verizon Consumer Business, speaking at the Bernstein Strategic Decisions conference Wednesday, cited three elements coming together.
One is network traffic returning to pre-pandemic levels, which he pointed to as an indicator of social and economic activity; second is retail channels reopening after store closures, with foot traffic continuing to grow in the first quarter; and third, popular smartphones with C-band support coming to market.
“All of the key handsets now are C-band compatible, so the opportunity for us to seed our base with C-band compatible before the launch of C-band at the end of the year is attractive” both from a consumer experience and investment perspective, Dunne said.
Verizon won’t start deploying C-band spectrum until later this year, but as Covid-19 related restrictions are lifted and people start to travel and gather more, it’s a good time to get new smartphones in hand as they frequent places where millimeter wave is already deployed in limited parts of 70 cities. It’s also a positive so Verizon can take advantage of its significant spectrum investment by utilizing incremental C-band capacity as soon as it’s available.
Dunne described the factors and a strategy “that really builds to a crescendo at the end of the year when we’ll be able to switch on C-band. And what we’ve found is literally within the last 6 weeks is really strong momentum both within our business itself, but more economic activity and people out and about so perfect timing.”
Verizon is aiming to have more than 50% of its base on 5G by 2023. Dunne said that is “hugely valuable for us” for both network efficiency and expanding the customer experience with Verizon, which will have mid-band coverage from C-band augmented mmWave spectrum capabilities and is offering things like gaming and content bundles.
“To do that you have to bring your base with you because just filling in the top of the hopper with new [subscribers] isn’t sufficient,” he said.
To that end, the promos announced yesterday target a variety of users. They include trade-in offers up to $700 for a new iPhone or $800 for Androids for new and existing customers that take Premium Unlimited plans, along with deals for lower-tiers and $300 to cover switching fees.
Along with getting more customers onto the 5G network, Verizon can generate more revenue per subscriber as they step up into unlimited and premium service tiers. The carrier reported increased service revenues but net losses for valuable postpaid phone customers in Q1. But Dunne stressed that Verizon is doing better in the switcher pool of the market – premium subscribers moving between carriers - than some think, where he said the carrier has “performed well and taken consistently our share.”
Verizon isn’t as strong in areas like prepaid subscribers migrating to postpaid, he acknowledged, where it has a much smaller base and is hoping to play more effectively if its pending acquisition of Tracfone closes.
However, for Verizon Dunne emphasized that he doesn’t see it as an either-or approach and cast a slightly different comparison to others, suggesting both elements of growing the consumer base and service revenue need to be included.
He sees it “as a strategy where I believe I can amplify the growth opportunity by attracting the best quality customer and then serving them well and expanding out the range of choice I offer.”
The 5G era offers a chance for more subscription-based services to add value and Verizon has seven premium entertainment options including new mobile gaming from Apple Arcade and Google Play Pass.
The step up for customers from metered to unlimited plans that are also taking more services from the carrier is a good model for Verizon to continue following, he said.
“That idea of growing the value of the relationship as well as growing the number of relationships out there,” Dunne continued.