Verizon to Field VoLTE Smartphones by Year-End, Service in 2014

Shammo’s forecast appeared to indicate a slight delay in Verizon’s VoLTE deployment plans, which two years ago were announced to start selling smartphones without CDMA this year. Verizon Chief Technology Officer Tony Melone forecast at the 2011 Mobile World Congress that Verizon would start selling VoLTE phones this year with the carrier’s LTE network becoming as ubiquitous as CDMA. VoLTE combines voice, messaging and Internet services into a single all-IP network.

Verizon announced its first successful VoLTE calls in 2011 and had 4G LTE service available in 491 U.S. markets and 287 million points of presence as of March 31, company officials said. The 4G LTE phones and other devices accounted for 28 percent of Verizon’s total postpaid connections at the end of Q1 with 40 percent of smartphones and 63 percent of Internet devices it sells on the network, Shammo said. Verizon ended Q1 with 98.9 million retail connections, including 93.2 million postpaid and 5.7 million prepaid. The connections represented 34.9 million Verizon accounts. Verizon added 677,000 new retail postpaid connections, up 35 percent from a year earlier, Shammo said.

In making the transition to VoLTE, Verizon doesn’t plan to support packet-to-circuit conversion that enables customers to move between LTE and CDMA 1X coverage without calls being dropped. VoIP calls on LTE will stay on the network and circuit-switched versions will remain on 1X, Verizon has said. Customers making a VoLTE calls will have connections broken when they move off the LTE network, but Verizon has said that will be rare.

MetroPCS, which is being acquired by T-Mobile, last year became the first U.S. carrier to make the leap to VoLTE in putting LG Electronics’ LG Connect 4G on sale in the Dallas area in August. MetroPCS uses the same spectrum for its 2G CDMA and 4G LTE networks, meaning every megahertz used to support CDMA is one less that could be deployed to bolster the LTE network, analysts have said. Mobile network testing firm Spirent also found last November that 4G calls made with the LG Connected drained power twice as fast those using CDMA. The drain from a VoLTE call had dropped by 35 percent when LG introduced the Spirit 4G earlier this year. The LG Spirit supported 875 minutes of CDMA talk time, but 575 minutes when making only 4G LTE calls. The Spirit had 38 percent more battery capacity than the Connect in switching to a 2,150-milliampere model. SK Telecom and Uplus also launched VoLTE services in South Korea last year.

Shammo also appeared to take aim at the upcoming FCC incentive auction of broadcast-TV spectrum. The Justice Department’s Antitrust Division has maintained that FCC auction rules should guarantee that smaller carriers, especially those that need lower frequency spectrum, are able to expand their portfolios. The DoJ raised its concerns as the FCC is weighing restricting the ability of Verizon and AT&T to bid in the spectrum auction. The DOJ “weighed in on a theoretical concern about market foreclosures,” Shammo said. “We believe the concern is really around some who buy the spectrum to keep others from buying the spectrum, and I think if you look at history, Verizon has never purchased spectrum for that reason,” Shammo said.

Verizon will “work closely” with the FCC “in order make that spectrum available to the people who need it,” Shammo said. Verizon divested some spectrum in 2012 that “we felt others could use more appropriately than we could,” he said. But when spectrum becomes available, Verizon has a “very long-term strategy” and will be “opportunistic if the climate presents itself,” Shammo said.

The carrier also remains “very interested” in buying Vodafone’s 45 percent of Verizon Wireless and is “extremely confident” such a deal could be completed “in a manner that is very tax-efficient and would not result in a tax on the gain in the stake,” Shammo said. Dish’s bid this week of $25 billion for Sprint “supported” Verizon’s move last year to start offering a quad play service option by striking agreements with Bright House, Comcast, Cox and Time-Warner to bundle wireless with cable, Shammo said. Verizon in the past also has resold DirecTV satellite service.

Verizon’s Q1 net income improved to $4.8 billion, from $3.9 billion a year earlier, as operating revenue grew 4.2 percent to $29.4 billion. Verizon’s total wireless revenue jumped 6.8 percent from a year ago to $19.5 billion as postpaid average revenue per account rose 6.9 percent to $150.27. The wireless business had 2.7 connections per account, which totaled 34.9 million as of March 31, up 5.1 percent from a year earlier, the company said. Smartphones made up 61 percent of the wireless postpaid customer base, up from 58 percent in Q4 2012, Verizon said. Monthly retail postpaid churn was up slightly in Q1 at 1.01 percent, the company said.

Verizon’s wireline consumer retail sales increased to $3.58 billion from $3.44 billion, the company said. Verizon added 188,000 net new FiOS DSL and 169,000 video customers, to end Q1 with 5.6 million and 4.9 million subscribers, up 12 percent and 12.5 percent from a year earlier, the company said. FiOS average revenue per user was $150. FiOS Internet penetration was 38.2 percent in Q1, against 36.1 percent a year ago, while video was 34.1 percent versus 32.3 percent, the company said. Verizon migrated 83,000 customer homes to fiber from copper in Q1, bringing the total switched across parts of 12 states with Verizon service to 316,000, the company said. Verizon is targeting moving about 300,000 homes to fiber this year, the company said.