It's likely due to increased competition and LTE
A Verizon executive believes smartphones will see lower subsidy costs for carriers over the next few years.
Fran Shammo, Verizon Communications CFO, said that he expects subsidies for mobile devices like smartphones and tablets to drop in the next two to three years due to increased competition and use of LTE technology.
"I'm a believer that over the next two to three years subsidies will start to decrease just because of the ecosystems," said Shammo.
Shammo, who spoke at the Deutsche Bank 2013 Media, Internet & Telecom Conference, bases his claims on the fact that more mobile platforms are emerging, such as Microsoft's Windows 8 and BlackBerry's BlackBerry 10. Increased competition could lead to lower smartphone costs, and hence, lead to lower subsidy costs for carriers.
Also, through the use of LTE technology (such as Verizon's Voice over LTE), mobile devices can be launched without CDMA chipsets in them, which would also reduce prices.
While reduced subsidy prices is great for carriers, since subsidy costs are a large part of the their expenses, carriers like Verizon can easily make up for subsidy costs over the course of customer contracts with more expensive plans.
Shammo discussed Verizon's Share Everything plans, which 23 percent of its postpaid customers joined at the end of the fourth quarter. He added that Verizon has seen great adoption of mobile hotspot devices, which leads to higher average user revenue.
In Q4 2012, Verizon posted $30 billion USD in revenue, up 5.7 percent from a year ago. It also added 2.1 million customers, bringing its total to 98.2 million wireless subscribers. The carrier sold 7.3 million LTE smartphones and hotspots for the quarter, moving its LTE technology along.
Just last month, Verizon announced costly prepaid plans including $60 USD/month for unlimited 3G talk and text, plus 500 MB of data and $70 USD/month for unlimited 3G talk and text, plus 2 GB of data.
Source: Fierce Wireless
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