updated 10:40 pm EST, Mon March 4, 2013
No plan to 'incent' phones with lower subsidies
Speaking at the Deutsche Bank 2013 Media, Internet, and Telecom Conference, Verizon Communications Chief Financial Officer Fran Shammo said that the company has no interest in offering additional commissions for sales staff to sell low-end phones over the free iPhone 4 with contract on the carrier. The CFO also addressed the impact of the FiOS network on the company's bottom line, as well as the impact of tablet sales on the company.
Shammo claimed that "the worst thing that can happen for us is for me to incent [sic] a salesperson to get you into a phone that you walk out the door with thinking you are going to like and in three days you come back because you don't like it. Therefore, now I've just subsidized two smartphones because that phone you used I can't resell as a new phone." In 2012, 53 percent of the company's smartphone sales were iPhones, an improvement of 44 percent from the previous year. The iPhone has a tendency to have the highest subsidy payments of all the phone providers.
Verizon's FiOS Internet service continues to drive profits for the company -- Shammo claims that the service is "about 70 percent of the revenues for the consumer side." Related to the consumer side, the joint Redbox service was referred to by Shammo as a "startup," and he said he expects some hits to the company's bottom line in 2013 from it.
Shammo said that 70 percent of tablet sales are just Wi-Fi models, or never connected to a 3G or LTE wireless network. He claimed that the company's "Share Everything" plan would lead to a higher attachment rate, but saw a lower-than-expected adoption rate. He does expect the "profile of usage" to increase, which when coupled with tiered data plans, should ultimately boost profits even more than current levels.