According to CFO Fran Shammo, Verizon will have LTE-only phones in the market by late 2014 and expects device subsidies to decrease in the next few years. Speaking at the Deutsche Bank 2013 Media, Internet & Telecom Conference, Shammo explained that the move to LTE-only devices in late 2014 will help reduce the cost of smart phones. Presumably if a device doesn't require a CDMA chipset at all the manufacturers will be able to cut costs, but we have to wonder by how much the price could change just by leaving the CDMA chipset out. Further expanding on reducing the cost of smart phones, Shammo said that he expects device subsidies to fall over the next two to three years due to competition between manufacturers.
Presumably lower upfront costs for devices mean smaller subsidies for the carrier to take the burden of, but we doubt those savings will be passed on to consumers. Subsidizing handsets is an expensive proposition for carriers, and any savings they find will be internalized while on-contract prices for consumers will likely stay the same. The rigid pricing model for on-contract phones in the U.S. makes it hard for savings to make it to the end user.
- Filed under: