Verizon May Push for LTE-Only Phones (no CDMA) in 2014 to Lower Subsidies

[gadgetrants]

If they don't offer the same coverage with LTE as they do with 3G, then Verizon could end up losing customer base if one of the other big two (AT&T/Spring) supply better coverage.

But doesn't this seem totally unlikely, given (a) how far ahead of everyone else they were in building the LTE network, and (b) how much they bask in the glory of "best network"? It would be a major turnaround in the VZW business model.

-Matt

 

[kodiak799]

If they don't offer the same coverage with LTE as they do with 3G, then Verizon could end up losing customer base if one of the other big two (AT&T/Spring) supply better coverage.

I doubt AT&T and Sprint will have better coverage. But to your point, if you travel then you'll have to pay more for a phone that still has a CDMA chip. VZW will save a few bucks on the subsidy, but don't expect the phones to be any cheaper. And if you need to add the CDMA chip, they'll probably mark that up, too.

Maybe I'm wrong and they will upgrade all their towers. I just think they'll cover where 99% of people live and then say they cover the whole US, when in reality the footprint service area might only be 50% of the country.

 

[Jeyman]

Ugh I cant think of what it was about cdma that Verizon was keeping phones locked in some way.. Anyone know what I am talking about? Verizon said LTE would be "open" in some way, but because of CDMA still being part of the backbone they used that to keep this locked out or something. AHHH what was that? anyone have a clue?

 

[dfcfu342]

I think you're referring to CDMA bands being proprietary (they were military created after all) so Verizon has total control over their network. LTE was developed to be universal but the carriers still require authentication thus keeping other carrier's phones off their network. In short Verizon controls the CDMA radios but the LTE chips in every phone are identical regardless of phone brand or carrier.

 

[dgstorm]

I'm not sure I get the "pull out CDMA chip" ---> "no subsidy for YOU!" logic. As I understand it, a "subsidy" (in this case) is an upfront discount the wireless provider is willing to suffer, as an incentive to get you on contract, which they then make back (and extra) with 2 years of usage plus accessories plus overage charges plus penalties, etc. I would have thought the two are unrelated. Can someone explain (I do get it that LTE phones are more expensive, but then again, removing a component should lower cost)?

-Matt

The connection is that by removing the CDMA chip, then the total cost for Big Red to subsidize the phone will go down because the overall cost of the device is cheaper. So, if a subsidized phone with a CDMA Radio chip in it normally cost $600 for VZW, and the consumer pays $200, then VZW pays $400 of that cost to subsidize it (although they likely get some kind of wholesale discount, but we won't factor that for this example). If the CDMA Radio chip cost $100 of that $600 bucks, then VZW would only have to subsidize $300, saving them $100 bucks per device sold. When you consider the millions of devices they sell, that could add up quickly. (Obviously my numbers are pure speculation, and the exact results would be different, but you get the gist of it.)

 

[xeene]

Maybe, maybe not. I live in a small town in southern UT and we have LTE in some areas of the town. Can't really figure it out, assume they have added it to one tower and are in the process of adding to another tower to give us complete coverage. However, on I-70, they installed a new tower a year or two ago, with NO LTE.

If they don't offer the same coverage with LTE as they do with 3G, then Verizon could end up losing customer base if one of the other big two (AT&T/Spring) supply better coverage.

they've already stated that by end of 2013 everywhere there is 3g right now will be covered by lte.