Editor’s Note: Wireless operators are a busy bunch, and as such RCR Wireless News will attempt to gather some of the important announcements that may slip through the cracks from the world’s largest carriers in a weekly wrap-up. Enjoy!
Executives from the nation’s largest carriers took to the stage this week at the Deutsche Bank Annual Media, Internet & Telecom Conference, each highlighting trends they are seeing across their operations.
–Verizon Communications EVP and CFO Fran Shammo reiterated that the device subsidy model is not dead and to move completely away from such an offering would be a mistake. The carrier continues to allow customers to either pay for the full price of their device through its Edge installment plan or by signing a two-year contract in exchange for receiving that device for a lower price.
“We believe that the subsidy model is an extremely good model. It has done wonders for us in this industry. So I think to abandon that I think is a mistake,” Shammo said. “But I do think that there are customers out there that want that installment sale. And obviously with our More Everything, what we did was when we really sat down and looked at it and studied it, we said, okay, we are going to have our subsidy model here we will overlay our Edge program here.”
Shammo went on to caution that installment plans leave the carrier open to financial challenges in the case of a customer stopping payments to the carrier all together.
“But when you get into the Edge side of the house, the one thing with Edge is this is a financing transaction from the carrier to the customer. And I think the caution at least I have as the CFO of Verizon, you have to make sure that the customers you are bringing on are very credit worthy because you are putting up some large receivables.”
–AT&T CFO John Stephens took his time on stage to express doubts regarding potential government approval of a possible Sprint acquisition of T-Mobile US. Those rumors would see the nation’s No. 3 and No. 4 operators combine to provide a larger No. 3 rival, thought to be a better competitor against industry leaders Verizon Wireless and AT&T Mobility.
AT&T in 2011 attempted to acquire T-Mobile USA for $39 billion in a deal that was eventually blocked by regulators citing competitive concerns. In blocking the deal, which AT&T had said was a move to acquire much-needed spectrum and not to remove a competitor from the market, regulators stated that they preferred to have four nationwide wireless operators.
“It would be interesting to see if the government varies from that,” Stephens said. “I don’t think they will.”
Stephens also said AT&T was more focused on its U.S. operations, following rumors last year that it was looking to possibly purchase U.K.-based telecom giant Vodafone. AT&T in January told U.K. regulators that it had no interest in purchasing a controlling stake in Vodafone.
—T-Mobile US had CFO Braxton Carter and CTO Neville Ray in attendance, with Braxton defending the carrier’s recent price increase for unlimited data services, noting that the carrier was looking to better monetize the plan.
T-Mobile US late last week announced that the previous unlimited data bucket for its Simple Choice plans that ran $20 per month has been clipped down to five gigabytes, with unlimited usage now running $30 per month per line. As part of the changes, the carrier also said that the included data bucket would grow from 500 megabytes to 1 GB and ustomers stepping up for an additional $10 per month per line would receive 3 GB of data, an increase from the previous 2.5 GB. T-Mobile US has seen its branded postpaid average revenue per user drop more than 6% since the second quarter of last year, with the carrier attributing some of the decline to consumers flocking to new rate plans.
Ray said the carrier was getting ready to begin deploying LTE services on its 1.9 GHz spectrum holdings, expanding capacity from the service’s initial launch using the 1.7/2.1 GHz band. The company said the additional spectrum support should be substantially completed by the middle of 2015. T-Mobile US is currently using its 1.9 GHz spectrum to support 2G and 3G service.
In addition, Ray said the carrier has begun looking at zoning issues related to its planned use of 700 MHz spectrum it’s in the process of acquiring from Verizon Wireless to further bolster its LTE service. T-Mobile US’ LTE network currently covers approximately 210 million potential customers, with plans to cover 230 million pops by mid-year and 250 million pops by the end of 2014.
–With a swirl of change behind the scenes, Sprint’s CFO Joe Euteneuer played up the carrier’s recently launched Framily rate plans, which he said have been well received by consumers. Those plans allow customers to link up to 10 lines of service under one account, with customers paying less per line the more lines they have on the account.
Speaking at the investor conference, Euteneuer explained that the Framily offering had basically turned customers into marketers for the carrier as they looked to add more people to their accounts in order to lower per-line prices. This would seem an ideal situation for Sprint as the carrier has recently been dinged in consumer surveys and network drive tests.
Euteneuer also said the carrier was focused on bolstering its network operations, with plans to cover 250 million pops with LTE services by the middle of this year, and that the carrier has accelerated deployment of LTE across its 800 MHz spectrum holdings to cover approximately 150 million pops by mid-2014.
–As part of its previously announced in-vehicle LTE connectivity agreement with Audi, AT&T Mobility provided pricing options for the service.
The company said customers would be offer two options, with a five gigabyte plan covering six months of service for $100 or a 30 GB plan covering 30 months for $500. All 2015 Audi A3 models, which initially will be the only vehicle compatible with the AT&T Mobility offering, will receive a free six-month trial.
AT&T said previous experience with Audi customer accessing services through its 3G network showed a preference for either a six month or three-year plan. The data allotment was based on average usage, with customers receiving an e-mail alert once they near the data allotment bucket.
Additional carrier news can be found on the RCR Wireless News “Carriers” page.
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