Verizon Thinks Customers Will Pay a Premium for LTE Access
Verizon Wireless executives beleive they will be able to charge customers a premium for access to the new Long Term Evolution network. John Killian, Verizon Communications CFO, says the company has said in the past, and continues to believe, that consumers will pay a premium for LTE quality and premium speed.
Others are not so sure. But one way of describing the potential impact is to look at Clearwire net additions in the second quarter of 2010.
As of June 30, 2010, 52 percent of the company’s wholesale subscribers resided outside of Clearwire’s currently launched markets, Clearwire says. That’s the impact of revenues paid by Sprint Nextel HTC Evo users who live in areas where all they can get is 3G network access.
Of course, that is an indirect indicator, as the net additions were driven by consumer demand for the Evo device, which does require an additional $10 a month payment–not directly for the 4G network, Sprint is quick to point out.
Still, now having had a chance to use the 4G and 3G networks Sprint and Clearwire operate, there is a clear latency advantage for the 4G network, which should be experienced on the Verizon LTE network as well. Sites load noticeably faster on 4G than they do using the 3G network.
Killian says Verizon Wireless LTE speeds will be eight times to 10 times the speed of the 3G network. If that turns out to be true, and there is every reason to believe it will be, consumers likely will make the same value-price decisions they already make for fixed service, namely that there is an expectation higher speed costs more than lower speeds.
Devices also will make a difference, though. Obviously, enough people thought the Evo was worth buying that a $10 a month surcharge did not seem to deter many of the earlier adopters. And though the surcharge is not specifically related to 4G access, more than half of Clearwire’s wholesale net adds (Sprint is a wholesaler) were from customers unable to get access to the 4G network immediately.
That is more a test of Evo demand than 4G, but it is illustrative. Consumers might well value faster mobile broadband enough to pay more, especially when bundled with attractive new devices.
http://investor.verizon.com/news/20100811/20100811_transcript.pdf
Verizon Wireless executives beleive they will be able to charge customers a premium for access to the new Long Term Evolution network. John Killian, Verizon Communications CFO, says the company has said in the past, and continues to believe, that consumers will pay a premium for LTE quality and premium speed.
Others are not so sure. But one way of describing the potential impact is to look at Clearwire net additions in the second quarter of 2010.
As of June 30, 2010, 52 percent of the company’s wholesale subscribers resided outside of Clearwire’s currently launched markets, Clearwire says. That’s the impact of revenues paid by Sprint Nextel HTC Evo users who live in areas where all they can get is 3G network access.
Of course, that is an indirect indicator, as the net additions were driven by consumer demand for the Evo device, which does require an additional $10 a month payment–not directly for the 4G network, Sprint is quick to point out.
Still, now having had a chance to use the 4G and 3G networks Sprint and Clearwire operate, there is a clear latency advantage for the 4G network, which should be experienced on the Verizon LTE network as well. Sites load noticeably faster on 4G than they do using the 3G network.
Killian says Verizon Wireless LTE speeds will be eight times to 10 times the speed of the 3G network. If that turns out to be true, and there is every reason to believe it will be, consumers likely will make the same value-price decisions they already make for fixed service, namely that there is an expectation higher speed costs more than lower speeds.
Devices also will make a difference, though. Obviously, enough people thought the Evo was worth buying that a $10 a month surcharge did not seem to deter many of the earlier adopters. And though the surcharge is not specifically related to 4G access, more than half of Clearwire’s wholesale net adds (Sprint is a wholesaler) were from customers unable to get access to the 4G network immediately.
That is more a test of Evo demand than 4G, but it is illustrative. Consumers might well value faster mobile broadband enough to pay more, especially when bundled with attractive new devices.
http://investor.verizon.com/news/20100811/20100811_transcript.pdf
