Monday, July 23, 2012

Verizon: Why Shared Data Plans are Good for Our Business

During its Q2 results call, Fran Shammo (pictured), Verizon's CFO explained why shared data plans (see "Verizon Wireless Adds Shared Data Plans (1-10GB)" - here) are good (for Verizon):

"Our Share Everything plans, which became available on June 28, represent a new and innovative pricing framework, providing a unique customer value proposition and at the same time creating an optimal way for us to monetize increasing data usage. The strategic thrust of these plans is to encourage device adoption and stimulate usage. Our plans are designed to make the decision to upgrade to a smartphone or add a tablet much easier. By allowing up to 10 devices to share data, these plans also provide for the creation and adoption of all kinds of new connected devices".
"Early feedback has been great, and our customer adoption is tracking with our expectations. We are seeing a wide variety of customers and family share accounts opting into Share Everything, including existing smartphone customers with unlimited data plans".

Later, answering a question on whether "we should be looking for some ARPU headwind in the third quarter", Mr. Shammo added: 

"It is very preliminary. We just launched this on June 28, so we just started in on this. I think some of the positive factors that we are seeing is that obviously your early adopters are always your optimizers. But to be honest, based on where we are at right now, we are actually tracking ahead of where we thought we would be, and we don't see any ARPU impact in the third quarter or fourth quarter. I think our trend will continue that we have established here in the first and second quarter".

"And the benefit, though, that we do see is that we are seeing some 3G Unlimited customers move into our 4G shared data plan product, and that is excellent for us from a cash flow position on capital efficiency and cost reduction metrics. So there is some interesting things there. And then again, the other thing on ARPU here is as Internet device ARPU continues to improve, that gives us better opportunity to accelerate our overall ARPU growth".

See "EDITED TRANSCRIPT - VZ - Q2 2012 Verizon Earnings Conference Call" - here.

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