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