In a recent interview, Verizon Communications CFO Fran Shammo said that due to competition from other carriers, Verizon’s subsidized prices are expected to drop within the next 2-3 years. Shammo said, “I’m a believer that over the next two to three years subsidies will start to decrease just because of the ecosystem.” Value-priced smartphones are becoming more prevalent in the competition, which is why it makes sense for Verizon’s move to lower subsidy costs. Shammo also mentioned that Verizon will start producing devices without CDMA radios built into them as voice technology moves towards LTE radios (VoLTE), thus averting more subsidy costs.
T-Mobile has said they plan to move exclusively to Value-Plans which has caused competitors like AT&T and Sprint to keep their eyes on the progress T-Mobile makes using these plans. It’s no surprise that Verizon plans to do the same. Carriers usually see a decrease in profit when they sell in higher volumes because of the subsidy costs. By cutting these costs, Verizon and the consumer both benefit; the consumer will have more affordable devices at their disposal while Verizon eliminates losses and generates more revenue.