Explosions in data traffic are coming soon
Verizon Wireless says that explosions in data traffic are coming real soon, and has been predicting much of the same for the past several months now.
Verizon's CFO John Killian says that data-heavy applications and devices are already consuming upwards of 800 megabytes of data per month and hinted that the wireless carrier will likely change its pricing structure as more and more mobile users move to smartphones and other MIDs (mobile Internet devices).
Killian added "We will probably need to change the design of our pricing scenario where it will not be totally unlimited and flat rate, but rather on a per usage policy."
AT&T Mobility has already announced new pricing plans for data and put an end to the promise of unlimited data (except for those that are already 'grandfathered' in). Now some wireless industry observers say it's only a matter of time before most other mobile service carriers adopt AT&T's pricing method.
Wireless carriers have moved from second to third and now fourth-generation networks in about ten years. Still, it is becoming very apparent that almost no network will be able to meet every single demand in the short term.
For its part, Verizon Wireless currently counts about 17.2 percent of its mobile subscribers on smartphones, but over time, Killian expects that at least 70 to 80 percent of its overall customers will be on smartphones.
Killian failed to give any time frame, but we can expect that the 70 to 80 percent mark would probably be attained in less than 18 months from now.
The notion of uncapped data has come as somewhat of a disservice to the carriers only recently. Until wireless networks and worthwhile devices were capable of using anything near one gigabyte per month, the wireless carriers' open-ended approach to pricing data plans helped them enjoy greater ARPUs at a near ubiquitous one-size-fits-all $30 monthly data plan.
And that is unsustainable most industry experts agree.
As mobile carriers ready their 4G networks, they are taking a new look at data and seem to have figured out that tiered pricing isn't likely to disrupt revenue streams as much as it is able to weed out or get more money out of the biggest users of mobile data.
As is expected by many industry observers, Verizon Wireless is reportedly working toward a tiered data pricing plan portfolio of its own. Details are expected soon.
While Verizon's wireless division has been recently paying down debt with some of its cash, its parents companies haven't done the same. According to The Wall Street Journal, Verizon Wireless could start paying a dividend in 2012 to supply parents Verizon Communications and Vodafone Group with a steady flow of cash. At least that's the plan for now.
Overall, Verizon Communications has been getting cash out of its wireless carrier division through a debt it owed by the joint venture, but that debt will be paid by the end of next year, according to Killian.
When the companies meet in December to talk about the partnership, a revived dividend is likely to be a top priority for Vodafone, which owns a 45.1 percent stake in the venture. Verizon Wireless paid a dividend from 2003 to 2005, but put an end to the payment in 2006.
The lack of a dividend has been a concern for investors almost ever since, and one that they hope will be rectified real soon.
SOURCE: Verizon Wireless