The markets are flat. Broadband, voice, TV and cellular. There are more cellphones activated than there are people in the US. The average home has 4 Internet enabled devices.
So what do you do if you are a Cellco and more than 60% of your revenue is wireless?
What do you do if your best selling smartphone can only attach to your 3G network? And you have this new LTE network that you want to monetize quickly (to pay back the costs on)?
"At Verizon Wireless, the iPhone effect was clear in Thursday's first-quarter report: the average monthly bill for subscribers on contract-based plans was $55.43, up 3.6 percent from a year ago. A few years ago, monthly fees were stagnant at Verizon," reported the USA Today in April 2012.
The problem with the iPhone is that Apple makes more money on it than the carriers. The subsidy is hurting Sprint, VZW and AT&T. It's one reason VZW pushes other smartphones. Suddenly, Leap/Cricket and others will be selling non-subsidized iPhones, which analysis says is cheaper over 2 years for the consumer. [Look here and NYT too.] Plus no extra fees and taxes on a pre-paid plan versus the monthly billing from the cellco. That may impact the Big 3. (Sprint has placed its bets on prepaid with Virgin Mobile selling the iPhone 4 and 4S by July.) The real winner: Apple.
I look at these rates and wonder why I am paying over $100 per month for an Android, when prepaid would be about half that!
VZW recently added a $30 upgrade fee. Fees add up to real revenue.
Now VZW is launching Shared Data Plans. You get unlimited voice and messaging, but the data bytes are bought in blocks.
One reason is that with 4 devices in a household, the family is paying big money. This is supposed to alleviate some of that MRR (monthly recurring revenue), while also allowing a household to purchase more devices. Without the attached device specific data plan, a household will buy more devices from VZW. (I assume non-subsidized devices.)
Gary Kim notes that VZW expects a slight "dilution" in revenue at the beginning. In the long run, they will make more money. Why? More devices, more consumption. It's why Amazon can sell the Fire so cheap - lots of revenue per device tied to its network. IN the long run, this will be just another way for VZW to increasse revenue.
I guess VZW isn't worried about its spectrum running out either.