Data Shows VZW's Costs for Transmitting Data are Going Down as Customers Pay More

Discussion in 'Android News' started by dgstorm, Jan 23, 2013.

  1. dgstorm
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    dgstorm Editor in Chief Staff Member Premium Member

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    As most (if not all) of you are aware, Verizon has been slowly altering their data plans over the past couple of years. They have been eliminating old ones and are introducing new ones that rarely benefit the customer, but instead benefit Verizon's profit margins. Apparently, that difference may be more pronounced than we thought. According to a minor analysis of Verizon's most recent earnings call, Verizon's costs associated with delivering data continue to go down, even as they are increasing costs to most of their customers. Here's a quote with some of the details,

    Now, of course we don't fault a company for trying to earn a profit. After-all it would be silly to operate a business that does not generate profit. That would be a charity. Also, between heavy pension costs and Hurricane Sandy repairs, Verizon actually took a loss last year. Still, sometimes it's hard not to think that Big Red is taking advantage a little bit, especially because they claim that their data plans are designed to minimize network clogging. That has always seemed like a lame excuse, and is even more so, realizing that their 4G network is 5 times more efficient than their 3G network.

    There comes a point when "min-maxing" just seems shady. Also, perhaps it would be an easier pill to swallow if VZW didn't shovel "horse-crap" excuses along with their policies. Share your perspective.
  2. Raverrevolution
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    Raverrevolution New Member

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    Too bad they couldn't just be good guys about things. They are such a force when it comes to cell phone service and they seem to just be a bully about it all.

    I really hope Google does start up a cell service, people jump ship, and Verizon gets some AOL style karma back.
  3. GotnFX
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    GotnFX Active Member

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    Totally agree with you on Google...however it has to be just as good if not better service otherwise it will just be another att or sprint
  4. Crankintopwater69
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    Crankintopwater69 Well-Known Member

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    Why am I not surprised:angry:
  5. NeoPhoenixTE
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    NeoPhoenixTE Member

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    ...and this is why I won't be renewing my contract in two years and just sit on month to month grandfathered in to my unlimited plan. :p
  6. Raverrevolution
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    Raverrevolution New Member

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    I would totally take that chance if it came up regardless. I couldn't see Google stagnate too much without innovation if they did have their own service.

    Verizon on the other hand is just all about the $$$. As long as they stay one step faster than the next guy they have somewhat of a monopoly and they could care less about your dissatisfaction.
  7. Raverrevolution
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    Raverrevolution New Member

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    I'm on the same exact boat as you.
  8. jseah
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    jseah New Member

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    Google would have to become a MVNO. Building a cellular network from scratch is just too cost prohibitive....besides, where would they get the spectrum from?
  9. ChevyNexus
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    ChevyNexus New Member

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    See what I think is that if Google started up its own cellular service people would switch just on the namesake alone. Google is a big enough juggernaut that I think its name alone when put on something sells it. Of course that's just my opinion.

    Sent from my Galaxy Nexus using Tapatalk 2
  10. benb1974
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    benb1974 Member

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    If Google started some 2.5 g service I would switch.
  11. combatmedic870
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    combatmedic870 Well-Known Member

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    If google where to build like 300 towers in major cities where they sold 5G(not VOLTE, but 5G like they are making in korea, 1gb per second), they would be 2 steps ahead of verizon.
  12. sNuFfYStiGLiTZ
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    sNuFfYStiGLiTZ New Member

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    Until they eventually kill of unlimited. It's going to happen lol
  13. Kryptyk
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    Kryptyk Member

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    I guess I see it as it is a "choice" to have a phone with data. It is not a "need". We keep blaming them for overcharging or taking it to us, which I do agree as well that they are, but we choose to keep paying these inflated prices. There are other choices, that are cheaper but may have less of a service area or reliablity, but indeed there are other options.

    I don't agree with the charges, believe me I don't like my $200+ dollar bill a month, but it is a choice to pay that amount. There are other ways to get email and other devices that support our needs such as GPS and stuff. Again, it is a choice. Sad but true.
  14. kodiak799
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    kodiak799 Well-Known Member

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    Just because the cost of transmission (i.e. marginal or variable cost) is decreasing says nothing about the fully loaded cost (including investment) to provide service.
  15. comk4ver
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    comk4ver Member

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    I refuse to believe that it takes more than two years to recoup investment cost. Does anyone know the cost of for the building our 4G network? Verizon has a surplus of money in their bank; unless they are starting the building of the 5G network (which I doubt considering they are just finishing up the 4G). Then next year should be the end of cost. Will Verizon stop charging exorbitant prices? No, after all no one is against a company making money there's an issue of just hoarding money and giving nothing back. I am not talking about giving money back but giving better services such as lowering cost or more options for services?
    Last edited: Jan 24, 2013
  16. kodiak799
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    kodiak799 Well-Known Member

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    It takes a lot longer than two years to recoup that investment. Their LTE buildout is costing TENS OF BILLIONS - they have over $50B in DEBT on their balance sheet. They're in the process of completing a deal for $4B, and that's just additional spectrum from cable companies.

    So typical for people to assume a fraction of what it actually costs and then whine about what they think is an unfair price.
    Last edited: Jan 24, 2013
  17. kinfolk248
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    kinfolk248 New Member

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    where are you getting these numbers?
  18. comk4ver
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    comk4ver Member

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    He got it from the fourth quarter financial paperwork. I would like to point out that also money actually spent this year was a mere $16.2 billion. To run Verizon it cost 30 billion. Verizon made 115.8 billion off all their customers that includes fios, mobile and landlines. So if Verizon really wanted they could pay off their debt and still keep 19.6 billion but refuse to do so. Instead they want to pass along their debt to us and keep their profits while claiming that it's too expensive for to give you a better data service.

    View attachment 60228
    Last edited: Jan 24, 2013
  19. kodiak799
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    kodiak799 Well-Known Member

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    They have other overhead - wages, health insurance, pensions, store rentals, maintenance costs. Oh, and their investors require a return (dividend yield is 4.8%)

    Normally I look at free cash flow. The past 3 years, they averaged about $31B a year. But that's before capital investment, and it's a capital intensive industry. Their capital investments (including maintenance) have averaged $18B a year. Another $5.5B in dividends. So it would take them @7 years to pay off their debt. Current assets basically cover current liabilities - so they aren't exactly swimming in it.

    Not a balance sheet that remotely reflects gouging customers. You want to see truly strong balance sheets go look at Apple, Google or even Microsoft.
  20. 94lt1
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    94lt1 DF Super Moderator Staff Member Premium Member

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    Keep in mind, they closed a bunch of call centers, they're streamlining their cs costs all the time.

    Also, their cutting back on what they want to pay for tower use, meanwhile increasing demands put on tower providers... the only exceptions being.. if they can bypass the tower effectively... then they're obviously just walking away and sticking antenna arrays in church steeples or clock towers...

    Vzw has cut their overhead a lot this last year.