Wireless cancellations will increase in 2015 causing changes in industry dynamics
Verizon Communications Inc has been dominating the wireless industry in the United States since a fairly long span of time. The company's rivals include AT&T and Sprint who offer similar services. Verizon internet and prepaid services have made it the industry giant and has strengthened their position in the market.
Verizon recently posted the results of its Q4 earnings which turned out to be fairly impressive. The company succeeding in adding 2.1 million connections to its vast portfolio, where a substantial number of them were postpaid consumers. This resulted in the company's retail connections to reach 108.2 by the end of FY14. Previously, the company reported of 102.1 retail connection in FY13 where an increase of 5.5 percent has been observed on year over year basis.
Previously, Sprint and T-Mobile came up with aggressive campaigns for which they completely changed their pricing strategy so that they could attract more users. They came up with several methodologies that not only engaged customers but also persuaded them to switch from other networks. Thus, in such a competitive environment Verizon still managed to sale swiftly without reducing its pricing on a year over year basis,.
This indicates that VZ is extremely popular amongst the masses where they did not need to cut down on prices to eliminate competition. They just consistently offered quality services at industry competitive rates where aggressive campaigns could not even harm the company.
However, according to the chief financial officer of Verizon, Fran Shammo this will not continue like this forever. He believes that this will not be because of network carrier but predicts that wireless cancellations are expected to increase to a great extent in FY15 while he addressed Media, Internet, & Telecom conference on March 10th.
Shammo clarified in the start of his address that this switch has no connection with the price war whatsoever. He believes that pricing is a much overhyped termed as projected by the media and does not deserve the limelight it usually gets.
"I think the press makes this price war out to be a lot more than it is, because what people don't realize is really all that has happened is there has been a shift between service revenue to equipment revenue," he stated. Shammo further explained, "So it is just a repositioning of how the customer pays for certain things."
Moreover he considers the changes in prices due to the transition observed in this sector. People initially opted for subsidies for phone but now are willing to pay full cost by opting for investment plans by network carriers. Verizon plans have done wonders for them so blaming the price war will be injustice when issue is wireless cancellations.