Verizon’s Doubled Data Plans Aimed at AT&T, Cost Savings




Verizon Wireless is doubling the size
of smartphone data plans to compete for customers and save on
capital spending for older wireless technology, said Verizon
Communications Inc. (VZ) Chief Financial Officer Fran Shammo.

The largest U.S. wireless operator, co-owned by Verizon
Communications and Vodafone Group Plc (VOD), this week bumped up the
amount of data it includes with smartphone plans — to 4
gigabits from 2 gigabits for $30 a month, for example. The offer
is drawing customers to the company’s higher-speed Long-Term
Evolution, or LTE, network and reducing the need for capital
investments in third-generation, or 3G, technology.

“It’s beneficial from a financial standpoint,” Shammo
said today at an investor conference in New York.

The move comes as Verizon Wireless is trying to stand out
against ATT Inc. (T) and Sprint Nextel Corp. (S) as the holiday-
shopping season begins. Though all three now sell Apple Inc. (AAPL)’s
iPhone 4S, ATT is the only one offering the older iPhone 3GS,
which is available for free. Sprint is the only carrier selling
the iPhone 4S with unlimited data plans.

“The fourth quarter is the industry’s best quarter, so
they are just trying to get some competitive edge for the
holiday season,” says Chetan Sharma of Chetan Sharma Consulting
in Issaquah, Washington.

Verizon’s double data plan is effectively a price cut, and
the first the company has attempted since it dropped its
unlimited data offer earlier this year. The new data offers are
a limited time promotion and new users will keep the higher data
allotments for the life of their contracts, Verizon said.

Competing Plans

Verizon’s current offer makes its data plans, in some
circumstances, less expensive than those from ATT, the second-
largest wireless carrier. ATT’s 4-gigabit plan costs $45 a
month, compared with Verizon’s $30. Verizon also offers 10
gigabits a month for $50, up from 5 gigabits, and 20 gigabits
for $80, up from 10.

Sharma said he thinks Verizon’s LTE sales are going well.
Not only is data being used as a competitive weapon, Sharma said
Verizon is making the offer to “understand consumer behavior”
so it can develop a pricing strategy.

It is looking primarily to see if higher caps draw
different customer segments, lure customers from other carriers,
reduce defections and “drive upgrades,” Sharma said.

Verizon, based in New York, fell 1.7 percent to $36.89 at
the close in New York. It has increased 3.1 percent this year.

Spending to Slow

Shammo said Verizon still expects to spend $16.5 billion on
capital expenditures this year and said there may be a decline
next year. He said he plans to give a 2012 capital spending
forecast in January.

With ATT trying to acquire T-Mobile USA, the fourth-
largest U.S. wireless operator, Shammo said the industry needs
more consolidation to remain healthy. The U.S. Justice
Department sued in August to block ATT’s $39 billion deal.

Verizon may be interested in buying wireless spectrum from
ATT or T-Mobile if the companies sell off assets as part of the
negotiations with Justice, Shammo said.

To contact the reporter on this story:
Scott Moritz in New York at
smoritz6@bloomberg.net

To contact the editor responsible for this story:
Peter Elstrom at
pelstrom@bloomberg.net

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Article source: http://www.bloomberg.com/news/2011-11-09/verizon-s-doubled-data-plans-aimed-at-at-t-cost-savings-1-.html

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