Verizon CFO: Customers like the plug-and-play nature of FWA

Verizon says that its (FWA) business is popular with consumers and businesses because it’s quick and easy-to-install.  And while it doesn’t necessarily always deliver the super-fast speeds of fiber, customers have plenty of bandwidth to stream content to multiple devices.

“It’s simple. It’s plug-in and go. And that resonates with customers,” said Verizon EVP and CFO Tony Skiadas, during a Morgan Stanley investor conference in Barcelona, Spain.

In Q3 Verizon added 384,000 FWA customers bringing its total FWA subscriber base to about 2.7 million. Skiadas said that the company is a “little in front” of its goal to get 4 million to 5 million FWA customers by the end of 2025, but added that Verizon is not ready to provide a new FWA subscriber target even though the engineering team is able to manage FWA demand with the amount of capacity in the network.

Although Verizon’s cable competitors predict that Verizon and T-Mobile will eventually face network capacity issues as their FWA subscribers ramp up and start to use more network resources, Skiadas said that he’s confident the company’s network engineering team is “in front of the demand curve.”  He also insisted that Verizon has options if FWA demand starts to spike.  “There are lots of ways to design a network,” he said. “If we have more demand for fixed wireless access that is a good problem.”

Verizon now has access to all of the C-band spectrum licenses that it was awarded in the 2021 C-band spectrum auction and Skiadas said that it currently has deployed C-band in about half of its cell sites nationwide. He estimates it will take another couple of years for the company to install C-band in the rest of its sites.

Verizon does offer a bundled price on its FWA service to its mobile customers that sign up for the broadband service, however Skiadas said that only about 10% of its mobile customers have purchased the converged product. “We’re not seeing a ton of demand for converged products,” he said.

The lack of demand for converged products is interesting because cable competitors such as Charter Communications are seeing a strong response to their bundled broadband and wireless packages. Charter currently bundles a $50 per month broadband service with a free wireless phone line for 12 months. This free wireless phone model is disparaged by wireless executives who say it isn’t sustainable and that those customers aren’t profitable.

“Our service is truly unlimited,” Skiadas said. “And we don’t have to provide free lines.”

AI is already making an impact

Interestingly, when asked about the use of artificial intelligence (AI) at the company, Skiadas said that Verizon is using AI in its customer care department and also in its network to optimize and improve the network’s performance.

However, he added that these are just a few early use cases for AI and Verizon is looking for more ways to use the technology to streamline its business.  

Verizon is in the midst of a corporate cost reduction program and plans to reduce its costs by between $2 billion and $3 billion by 2025. Skiadas said the company is on track to do that.

He also reiterated Verizon’s plan to reduce its capex in 2024 to between $17 billion and $17.5 billion. He said that most of Verizon’s spending will be to deploy the rest of the C-band and for its expansion of its Fios footprint and that spending on LTE will decline in 2024 as usage shifts to the 5G network.