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Verizon: Data sharing will end ARPU metric

Wed, 05/16/2012 - 2:29pm
Andrew Berg, Wireless Week

Verizon's Fran ShammoVerizon Communications CFO Fran Shammo today revealed more than had previously been released about the company's plans to launch data sharing plans this summer. Such plans would allow users to connect multiple devices to one data plan.

Shammo, speaking at J.P. Morgan's investor conference, said that the move to shared data plans would push the industry away from using average revenue per user (ARPU) as a gauge of growth to a new metric: average revenue per account (ARPA).

Verizon hopes to roll out the new plans by mid-summer.

"The new plan is built on tiers, and as we look at the growth of LTE consumption … it's going to be more important that people will start to upgrade in their tiers as people realize the value of LTE," Shammo said.

According to Shammo, anyone who signs up for LTE service will be required to move from their unlimited plan to the data share plan.

Such a plan could have a dramatic effect on the number of tablets, such as Apple's iPad, that are currently connecting to cellular networks. Shammo recognized that only a small percentage of tablets sold right now are actually equipped with a cellular modem, with many users not wanting to assume the financial burden of yet another data plan for another device.

Shammo pitched the new plans as a "win-win" for customers, as well as Verizon. He said that data sharing would allow consumers to more easily connect multiple devices, while at the same time, Verizon is not going to take a "huge revenue dilution," nor will there be a short-term slowdown in revenue due to migration.

On the topic of Voice over LTE (VoLTE), Shammo said the delay in rollout has been largely due to perfecting the reliability of the service and the fact that a true rollout will depend on the complete rollout of Verizon’s LTE footprint, which it hopes to have completed by mid-2013.

“We are going to launch VoLTE at the end of this year,” Shammo said, “but you probably won’t see us push it until we have the full LTE footprint.”

When asked whether the growth slowdown seen across carrier earnings for the first quarter was a sign of things to come, Shammo cast the first quarter as traditionally a slower quarter, noting that LTE would be a driver going forward.

Shammo expects postpaid net adds to continue to grow throughout the year, but he again stressed that subscriber additions will be less important as the industry moves to data sharing plans.

"It won't be revenue per customer anymore … it's going to be revenue per account," he said.

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