Verizon sees revenue increase from shared plans
NEW YORK (Reuters) - Verizon Wireless should see an increase in date revenue after it offers new shared data plans this summer, according to a top executive for parent company Verizon Communications Inc (VZ.N).
Verizon's intends to allow customers to share their data allowance among different devices, unlike their current offerings, where they have to sign up for a separate data plan for every device connected to the wireless operator's network.
Verizon Chief Financial Officer Fran Shammo said he expects the new offering to encourage more customers to connect more devices to its network. As a result, he expects them to sign up for higher-tier data services that come with higher prices.
"We're fairly confident we'll start to see people uptick in the tiers, which is where we'll see the revenue accretion." Shammo said in a webcast of an investor conference.
Once the shared plans are available, Shammo said he would change how he reports wireless revenue. Instead of reporting average revenue per user, Shammo said the company would start reporting average revenue per account.
One area where carriers like Verizon have been missing out is tablet computers as consumers have been hesitant to pay the extra cost of connecting their tablet to the cellular network. But Shammo said this may change with shared data plans.
Another sticking point is that operators like Verizon do not subsidize tablet computers. Shammo said this would not change any time soon.
"We're holding pretty strong with the model of no subsidies on these devices," the executive said.
The high price of devices such as the Apple Inc (AAPL.O) iPhone have hurt operator margins as Verizon and its rivals pay hefty subsidies for the device so it can offer the phones at a discount to customers who sign a two-year contract.
But Shammo said he is looking closely at moves by European operators to back off on subsidizing smart phones.
"I think the industry is going to look hard at these types of models going forward," he said.
Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc (VOD.L).
(Reporting By Sinead Carew)
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