Flat-rater carrier MetroPCS (NASDAQ:PCS) is deploying EV-DO data service in a little less than 20 percent of its cell sites to augment its CDMA 1X data service that exists in all of its markets, CFO Braxton Carter said.
Carter, speaking at the Bank of America Merrill Lynch Media, Entertainment & Communications conference, said that cumulative investment for the deployment will be less than $100 million by the end of the year, and that the company is already seeing positive results. The carrier said during its second-quarter earnings announcement that it will increase capital expenditures this year from a previous estimate of $700 million to $900 million to a new target of $900 million to $1 billion. Carter said the EV-DO deployment is part of that increase.
CDMA carrier MetroPCS skipped deploying a 3G EV-DO network and instead moved straight to LTE, which it turned on late last year.
Carter said that the company wants to migrate more customers to its LTE network, but will likely not be able to do so until it can offer cheaper LTE Android smartphones--devices that MetroPCS can purchase for under $200--which he said likely will not happen until the end of next year. He noted that MetroPCS will have spent around $1 billion total on its LTE network through early next year. "The good news is a lot of that investment is already behind us," he said. "The bad news is we're in this transition period." MetroPCS has LTE service in its 14 core markets.
Interestingly, as part of that transition to LTE, Carter said MetroPCS is making ample use of Wi-Fi offloading. Carter said "a lot" of smartphone data traffic is now going over Wi-Fi--in some cases as much as 70 percent, though he did not provide more details. Wi-Fi connectivity firm iPass recently said that the company's research indicates that MetroPCS may be offloading as much as 20 percent of its cellular traffic onto Wi-Fi networks.
When asked if having more smartphones on a 1X network would lead to customer disappointment and higher churn, Carter said that the company's smartphone churn is improving and is not materially different than feature phone churn. However, he acknowledged that if customers want to stream video or audio on the carrier's 1X network, they likely will not have a positive experience. Carter then noted that MetroPCS does currently offer two LTE phones, the Samsung Craft and Samsung Galaxy Indulge, an Android phone.
Carter also touched on Verizon Wireless' (NYSE:VZ) nationwide launch of its $50 prepaid unlimited "Unleashed" plan, which offers unlimited voice, texting and Web access for feature phones. The MetroPCS executive said he was not worried about the plan, echoing similar comments made yesterday by Leap Wireless (NASDAQ:LEAP) CEO Dough Hutcheson about Unleashed.
Unleashed is "a pure big box [retailer] play," Carter said. "It's never been a key focus of ours." Carter speculated that Verizon might be targeting T-Mobile USA customers with the plan. Verizon Communications CFO Shammo said Wednesday that the launch was done to coincide with the launch of Verizon's retail relationship with RadioShack, given that the retailer sells a great deal of prepaid service.
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