Verizon's Shammo: Toll-free data still faces hurdles

Verizon Communications (NYSE:VZ) CFO Fran Shammo said although content providers have approached Verizon Wireless about wanting to subsidize content delivery, there are still technology hurdles to making that a reality.

In an appearance at the Oppenheimer Technology, Internet & Communications Conference, Shammo said "there are content providers who have come to us and said, 'We would be willing to pay for content to your end user.'"

However, he said the difficulty of such a plan lies in capturing exactly how many subscribers viewed such content and when so that content providers can then turn to their advertisers to monetize the content. Shammo said the technology to do so is developing and that as the ecosystem evolves "then we will start to see the change of who pays for content."

Wireless executives, mostly at Verizon and AT&T (NYSE:T), have been talking for more than a year about the possibility of plans that, like a toll-free calling service, would allow content providers to pay carriers so that users could view their content without it counting against their data bucket. In mid-May, the Wall Street Journal reported that ESPN was in talks with a Tier 1 wireless operator about potentially subsidizing consumer access to the company's content via mobile. Shammo's comments echo ones he made at another investor conference in May, shortly after the Journal report.

Net neutrality advocates, including representatives from public interest groups, have argued against such plans, saying that they will favor rich and large content companies over smaller ones.

Shammo said, as he has in the past, that Verizon could potentially charge LTE users different prices based on the time of day or other variations. However, he said "whether that's ever turned on, I don't know," because it might overly confuse users. He said the simplicity of the carrier's Share Everything shared data plans, which come with unlimited voice and messaging, has helped reduced the number of calls to customer service. Such calls are "a huge infrastructure cost for us," he said.

During the appearance Shammo also touched on several upcoming Verizon Wireless initiatives. He noted that 59 percent of Verizon's wireless data traffic is running on its LTE network, and that one-third of the carrier's accounts are on LTE. To cope with that, Verizon has started laying the groundwork to deploy LTE on its 1700 MHz AWS spectrum to boost capacity. He said Verizon is being forced to deploy that spectrum "probably sooner than we want," but that the carrier still feels comfortable about its spectrum position over the next four to five years.

Shammo said Verizon will deploy AWS spectrum on a 10x10 MHz configuration in some markets and in a 20x20 MHz configuration in other markets. He said smartphones that Verizon launches in the third quarter and especially into the fourth quarter will be able to take advantage of the new spectrum.

Shammo reiterated that Verizon will launch its first Voice over LTE handset in the fourth quarter, with a wider commercial launch of VoLTE in the first half of 2014. He said the technology will support new features like more video chatting and video voicemails. 

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