AT&T, Verizon look to further squeeze subscribers as earnings soar

AT&T, Verizon Squeeze Subscribers

AT&T noted record smartphone sales when it posted a monster holiday quarter to close out 2011, and the carrier came back in the first quarter this year with another record-setting report that beat Wall Street’s profit expectations. Verizon Wireless reported record revenue growth in the fourth quarter last year, and profits were up 16% in the first quarter of 2012 compared to the same quarter in 2011. But despite soaring performance, executives at both carriers confirmed to investors this week that they are preparing to make new moves in an effort to squeeze more revenue out of subscribers.

Earlier this week, Verizon Communications chief financial officer Fran Shammo confirmed that Verizon Wireless will force customers off of their grandfathered unlimited smartphone data plans and onto more expensive shared data plans when they upgrade to 4G handsets. “A lot of our 3G base is on unlimited,” Shammo said while speaking at the annual J.P. Morgan Technology, Media and Telecom conference. “When they migrate off 3G they will have to go to data share. That is beneficial to us.”

He continued, noting that the move to shared data plans will help the carrier increase its average revenue per user (ARPU). “I think revenue ARPU will continue to grow as we get into data share plans and people start to connect more devices [on the network]. As they add more devices, they are going to have to buy up into tiers. So again, you will see the revenue increase there.”

During the same conference, AT&T CEO Ralph de la Vega commented that the carrier will take particular care moving forward to offer smartphones that keep subsidies as low as possible while maintaining high magins. “We have to watch subsidies and make sure that we bring devices to market that customers love and will keep and have low subsidies,” de la Vega said according to Fierce Wireless.

Like Verizon, AT&T also intends to boost its average revenue per user by offering shared data plans to its subscribers.

These moves by the nation’s top two wireless carriers are part of ongoing efforts to maximize performance despite potential negative ramifications for subscribers. Both Verizon Wireless and AT&T recently did away with their unlimited smartphone data plans, instead opting for tiered data plans that impose steep penalties on customers who go over their monthly data allotments.

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