Speaking at a recent Deutsche Bank’s Media, Internet, and Telecom conference Verizon’s CFO Fran Shammo revealed that the company is looking to remove the CDMA chips from phones, in a bid to reduce subsidies.
When asked a question about where subsidies are headed, the Chief Financial Officer answered that subsidies will start to decrease, over the next two to three years, just because of the increasing competition from Windows Phone and Blackberry. However internally the company also wants to see subsidies reduced and has plans to switch to pure LTE handsets.
Verizon is investing heavily in LTE technology and has plans to get voice over LTE (VoLTE) running by the end of this year, maybe the beginning of next year. Then once this has been deployed the company says that by late 2014 it will be possible to take the CDMA chip out of the smartphones and just have a pure LTE handset. This will in turn start to reduce subsidies.
Backwards compatibility is a cost issue for today’s modern phones, along with chip sets for Wi-Fi, Bluetooth and NFC, the phones need chips for GSM, 3G and now 4G LTE. Removing support for the older networks (CDMA in Verizon’s case) will reduce the cost of the phone. Of course for that to work, the LTE networks need to be mature in terms of coverage and reliability.
At the moment Verizon’s LTE network is available in 480 cities, which the company says gives 87% of America’s population access to 4G. Its 3G network is in a better shape, but outside of the cities the 4G coverage is low. The last thing you want is to go out for a family outing and find you have no network signal!
The other question is will companies like Verizon pass on the savings in subsidies to the consumers or is it just a business move to increase profits?
What do you think? Would you buy a 4G only smartphone for use with a company like Verizon (assuming it improves its coverage to at least what its 3G coverage is today). Let me know by leaving a comment below.
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Say goodbye to battery life… ;)
Their plan from the beginning of LTE rollout has been to shut down 3g and CDMA in 10-12 years. This is not surprising in the least.
Goodbye reasonably priced phones and overly expensive contracts, hello hellish contracts and even higher priced phones. I HIGHLY doubt that Verizon will take the T-Mobile approach and cut subsidies to allow consumers to pay less monthly bills. Add to the fact that everyone using the more expensive, battery destroying LTE and congesting the network, Verizon will make even more of a killing from you guys. Take my advice, buy the next Nexus from Google this summer, get on T-Mobile’s unlimited value plan, and save millions of lives.
I gave up on Verizon when I found out how long they take to distribute OS updates. Never again. Nexus on T-mobile.
The battery life will actually improve, because that will be one less radio looking for signal.
It’s the strain the LTE bands put on the phones’ CPU and GPU that kill battery life.
I highly doubt that vzw will pass the saving to the consumers, that’s savings that they will put in their own pockets….By then their LTE should be on par with their 3G coverage area….I would buy a LTE only cellphone if that’s the route that they are taking…I hear people all the time complaining about other companies service and those same people complaint about vzw if you tell them to switch to vzw…at the same time whenever we go outside the city and they don’t have any service on their cellphone they borrow my phone…
I love VZW’s LTE speeds, but their coverage where I am is really hit or miss within a 10 mile radius, let alone the rest of my state. I really hope I can find a decent pay-as-you-go type plan such as Virgin mobile after my contract is up. Even if it means sacrificing some of those LTE speeds. VZW absolutely murders you with how much they charge.