A Verizon executive said Wednesday the carrier is avoiding a step into the device leasing space to avoid blowback from wireless customers who discover a lack of value in the programs.
In comments made at the Jeffries 2016 Media and Communications Conference, Verizon executive vice president of wireless operations David Small said the company currently has no plans to introduce its own device leasing program, but is watching the market carefully.
Verizon is currently the only Tier-1 carrier that does not offer a device leasing program.
“At this point we don’t see that as something we’re going to be offering anytime soon,” Small said.
According to Small, one of the problems Verizon sees with leasing is that customers who sign up for the programs “don’t exactly understand” what they’re signing up for. While Small acknowledged that $1 or $5 lease offers may be attractive on their face, he said the setup generally offers little value to the customer.
Small said lease programs not only ask consumers to trade in a device in good working order without returning value for that trade, but also leave customers without ownership of a new device at the end of the lease term.
As lease terms begin to expire, Small said he expects the unfairness of this structure to become apparent to customers.
“I think we’re going to see a little blowback from customers who don’t know what the arrangement is,” Small said. “We’re going to watch it carefully and if we see a strong demand from consumers, then that’s something we’ll evaluate.”
Small also shed some light on the carrier’s recent introduction of its “No Regrets” promotion, which offers consumers who switch to big red up to $650 to cover early termination fees from their old carrier. The offer is nearly identical to similar promotions from the other three top U.S. carriers.
Rather than using the promotion to draw in new customers, Small said the offer was primarily a tool to keep Verizon’s base in place. Small said when consumers realize all four carriers are offering the same promotion, they’re less likely to jump ship.
However, Small said Verizon has seen “very strong success” with its promotion offering 2GB of extra data each month for life to new and existing customers who upgrade or activate a new phone on the carrier’s X-Large or higher plans.
Small said the offer particularly appeals to customers who were enamored with the idea of unlimited plans but are coming to terms with the reality of the “hooks” involved with that service. Small said Verizon works to help customers understand their consumption patterns and understand that unlimited might not necessarily be the right option for them.
As Verizon sees increasing competitive pressure in the family sector, Small said the carrier is “looking very closely” at its single and multi-line accounts and will “make competitive moves” as necessary.
Fiber for buildouts
Small also said the carrier is looking to expand its fiber assets to facilitate the continued buildout of its network in anticipation of 5G.
According to Small, 5G will require a denser infrastructure and Verizon prefers to be able to build out that infrastructure on its own fiber assets.
In that regard, Small said he’s “very excited” about the carrier’s recent acquisition of XO Communication’s fiber assets and said there are a “number of ways” Verizon plans to exploit those assets.
Taking a page from Sprint, Small said Verizon will continue efforts to cut its business costs.
Small said last year’s restructuring of Verizon’s wireless division to eliminate one vertical layer yielded the ability to also cut some horizontal layers. Small said the company has seen “some very good benefits” in terms of speed, agility and information flow resulting from the cuts, and said Verizon will continue to hone its operations to cut the cost of business.
Already, Small said the company has cut call volumes in its customer service division from 160 million calls in 2014 to 133 million in 2015, with decreases continuing into this year. Small said the company is currently looking at trimming call times as well.
Small also said the company has had some success in trimming costs in its retail channel by speeding up time to transactions. A target has been set, he said, to increase the percentage of transactions that occur within 30 minutes of a customer entering the store.