Verizon thinks that the prepaid phone market is dead, and that's okay
If your response to the question "How much money did Verizon make in the last quarter" was "$3.79 billion in net profit," then congratulations. Big Red can afford to feel quite smug about its performance in the last three months, finding 1.53 million new wireless customers, of which 1.52 million took up monthly contracts. The tiny sliver of prepaid users has led the company to believe that the pay-as-you-go market is beginning to shrink as people move to monthly deals. Verizon is also happy to announce that it flogged 1.1 million LTE-equipped tablets this quarter, only a slight dip on the 1.15 million sold last time 'round. It's something that the company is happy to encourage, since people are likely to keep hold of their tablets for longer and are much cheaper to subsidize than comparable smartphones.
During the company's third-quarter announcement and subsequent earnings call, Verizon pledged to continue throwing money around to remain king of the network hill. According to the release, Big Red is pledging to spend around $17 billion on capital costs, which include building out and optimizing its 4G network in 2014. At the same time, the company casually mentioned that XLTE, faster data rates that rely upon the company's 2012 purchase of AWS spectrum, is now available in 400 markets across the US.
Normally, Verizon likes to talk about how many iPhones it has sold in a quarter, but CFO Fran Shammo was unusually terse when Apple was mentioned. When asked about new device sales, he merely said that there's a "high backlog of demand," and changed the subject to the 3.1 million users who signed a deal for a free iPhone back in 2012. Now that those users contracts are beginning to expire, they'll be looking for a fresh deal, and Shammo is hoping that they'll choose to upgrade to a new Verizon device. The company was notoriously absent from Apple's soft-SIM that we saw in the iPad last week, but Shammo was brusque when asked why Verizon wasn't a participant, simply answering "We have our own SIM card that we place in our devices. That's really all there is to be said on that issue."
Verizon's broadband team can also feel self-congratulatory about its work in the last three months. After all, the company gained 162,000 new FiOS data users and 114,000 FiOS video customers. Perhaps it's not too unreasonable to wonder if the 48,000 homes that didn't subscribe to the latter are preferring to source their entertainment from other, online, sources instead. Perhaps that's one of the reasons that the company is working on more streaming deals with the NFL and companies like Viacom to ensure that people don't think too hard about straying -- unlike the folks over at AT&T and Comcast.
During the earnings call, Fran Shammo was asked both about LTE Multicast and the company's purchase of Intel's doomed video service OnCue. On the subject of LTE Multicast, the company's 4G-based video streaming platform, the message was that Verizon is hoping that broadcasters will adopt the technology next year, but is entirely dependent on how rapidly the tech is taken up. He was vaguer about OnCue, and the potential of internet-based TV more generally, just saying that such technology makes him "optimistic for the future of the video business."
