Verizon's LTE: How Much More $$ Than 3G?

Verizon Wireless could charge between $10 and $15 more for its Long Term Evolution (LTE) than it currently does for 3G, according to a Heavy Reading analyst.

Verizon CFO John Killian suggested this week that users would pay more for the service, which should offer download speeds at least five times faster than the operator's current EV-DO 3G service. "Customers will pay for quality and premium service and premium speed," Killian stated at this week's Oppenheimer & Co. Inc. conference in Boston. (See Tablets Prescribed for Verizon.)

LR Mobile asked Heavy Reading senior consultant Berge Ayvazian how much more Verizon could reasonably charge for LTE. "I expect Verizon to charge a $10 to $15 premium for 4G LTE service over straight EVDO," the analyst said in an email reply to questions.

Verizon says that it will initially offer LTE service for laptop users who want faster downloads, with smartphones following in the first half of 2011. Verizon will likely offer a combo package with both 3G and "4G" service it rolls out LTE coverage. The planned nationwide LTE deployment is expected to be completed in 2013.

"Inevitably Verizon Wireless customers will need both EV-DO and LTE to get the right combination of mobile broadband coverage, performance and speed," comments Ayvazian. Verizon hasn't said yet where it will launch LTE in the fourth quarter of 2010 but early big-city services appear to be a given as Verizon expects to go from zero to a 100 million potential users by the end of the year.

Ayvazian notes that Verizon would be following in Sprint Corp. (NYSE: S)'s footsteps by charging a premium for the faster proto-4G service: "Sprint already charges a $10 a month premium for 4G smartphone uses of the EVO, even if [customers] do not live in a 4G served area or find 4G coverage in any month. So this 4G premium is linked to the extent of 4G coverage, not just the performance."

Eventually LTE is supposed to make it cheaper for operators to offer data services because it costs less for Verizon and others to serve emails, audio, and video over a pure IP than via its current 3G offering. Of course, carriers have to spend big to deploy faster networks in the first place -- Killian has said previously that Verizon will spend around $17 billion on capex this year.

Nonetheless, it appears subscribers will have to wait and see if the cost savings that LTE is supposed to deliver will eventually be seen in their pocket.

— Dan Jones, Site Editor, Light Reading Mobile

Gabriel Brown 12/5/2012 | 4:26:41 PM
re: Verizon's LTE: How Much More $$ Than 3G?

I'd probably pay a little more for LTE (over HSPA in the UK). Would you?

But I wonder if a price premium is sustainable for very long? Or is it viable at all in the mass-market?


joset01 12/5/2012 | 4:26:40 PM
re: Verizon's LTE: How Much More $$ Than 3G?

I suspect that $10 will be the premium for a while in the US. You can bet that Clearwire and T-Mobile will try to exploit with data deals that if a premium is imposed.

Specter619 12/5/2012 | 4:26:35 PM
re: Verizon's LTE: How Much More $$ Than 3G? One thing is for sure smart phones are evolving the industry into something new and possibly exciting. It makes sense that the pricing would evolve along with it. The real question is given our current economic state, how much "extra" is the average consumer willing to pay for these gadgets and the mobile media that they offer?
Mobile Reader 12/5/2012 | 4:16:02 PM
re: Verizon's LTE: How Much More $$ Than 3G?

I'm waiting to replace my i910 phone with an LTE phone, but I can barely stand my current bill's high $29.95 monthly fee for the faster EVDO internet service.  So I'm a little bit worried about what the LTE pricing structure might look like with LTE.

In a perfect world, it'd cost the same thing, since a GB of data is a GB of data no matter how fast it is delivered, and EVDO is currently offered with unlimited GB's for $29.95.  However, I understand that there might be a few that really abuse the new faster data rates of LTE, so I'd like to propose the following below.  Please comment on my pricing structure (which I think is very fair to consumers and Verizon alike) and what you think of it and/or make your own proposal.  Thanks! :)

I think when they roll out phones with LTE, they need to have it so that the customer can toggle between EVDO and LTE (or the phone should have EVDO as its default but the customer can turn LTE on, as needed, for video or whatever).  The pricing should remain the exact same as it is now, with EVDO being unlimited GB, but capping the LTE at 5 GB.

After 5 GB of LTE service (and with unlimited EVDO kept separately), the customer must then decide if they want to continue using EVDO *only* at no additional charge, or start paying an extra fee.

I suggest an extra fee of $10 per each additional 1 GB of LTE used until a total of 8 GB are used - that'd be 5 GB for free, plus 3 extra GB at $10 each for a total of $30 extra dollars to that month's bill, for example, if the 3 extra GB are used).

Then $5 per each 1 GB of any LTE after a total of 8 GB of LTE is used should be charged.   For example: A total of 10 GB of LTE in a month (EVDO is separate) would equal 5 GB free, plus 3 GB at $10 each, plus 2 GB at $5 each, so that's $0+(3*$10)+(2*$5) = $0+$30+$10 = $40 extra that month.

If Verizon deems the above to be too confusing, then I'd suggest a flat rate of $5 per each 1 GB over the first 5 free GB's of LTE each month, again with EVDO being unlimited and separate.

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