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Handset subsidies will fall when Verizon can offer only dedicated VoLTE smartphones, its CFO says.

Verizon Envisions Cheaper VoLTE Subsidies

Sarah Reedy
8/16/2013
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Verizon Wireless says it's on (its readjusted) track to launch voice-over LTE (VoLTE) next year, and it's expecting handset subsidy prices to fall when the 4G voice technology is mainstream.

Addressing an Oppenheimer conference this week, Verizon CFO Fran Shammo outlined the company's timeline for VoLTE:

When voice is no longer a line item, there's a good chance Verizon will change the pricing for its data-only network. It hasn't said when or whether unlimited data will be gone for good, but Shammo did say handset subsidy prices should fall in three to four years by virtue of "the technology and the manufacturing efficiency of this technology," as well as increasing competition.

"As you get to the end of 2014, we will have our first LTE-only handset," Shammo told the Oppenheimer crowd, according to the Android Authority blog. "When that happens, I then take the CDMA chip out of the handset, and my subsidy will decrease."

However, as the Android Authority aptly points out, Shammo didn't clarify whether he meant that the subsidies Verizon pays will fall, or that the prices its customers pay for devices will fall. It could be both.

Verizon has the largest LTE footprint in the US, but AT&T Inc. (NYSE: T) may beat it to the punch on VoLTE. It plans to turn on 4G voice in its network this year. Neither operator has said whether its service will support only voice and SMS or a full suite of rich communications services at launch. (See: AT&T Plans 4G Voice Launch This Year and Shades of VoLTE.)

— Sarah Reedy, Senior Editor, Light Reading

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SarahReedy
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SarahReedy,
User Rank: Blogger
8/16/2013 | 2:53:34 PM
Re: My subsidy or yours?
Ok, I've been reminded on Twitter that wireless operators rarely pass cost savings on to their customers. Wah wah. So, let's be honest, the "my" meant Verizon. 

What do you think will happen when we have VoLTE-only phones? Higher-priced handsets and data plans? I think no more grandfathered in unlimited plans is a given.
SarahReedy
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SarahReedy,
User Rank: Blogger
8/16/2013 | 2:20:52 PM
My subsidy or yours?
It is a little tricky how Shammo worded it that "my subsidy" will go down -- does my mean Verizon or Shammo as the customer? Without the CDMA chip, the phones should cost less, so Verizon is shelling out less to the handset makers, and it can pass those cost savings along to customers. That's the hope, but it'll be awhile before it's comfortable enough with VoLTE to ditch the CDMA chips anyway.
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