Data usage, not the Storm, drives VZW's Q4

“I think you need to look at a number of factors – service revenue grew 12%, ARPU increased 1.4%, data revenues continued to grow about 41%, and non-messaging revenue increased 52%,” Strigl said. “We are selling more smartphones, about 37% of retail devices sold, increasing our focus on the business segment, where we have relatively lower share, so our growth drivers are clearly working for us. I don’t think we lost share this quarter; there’s no evidence of slowing or customers trading down on phones or features.”

In 2008, VZW launched 36 new devices, more than one third of which were PDAs and smartphones, according to Strigl. He said to expect two dozen more launches within the first half of this year. He also highlighted that VZW was the first to introduce nationwide unlimited calling plans and megabyte pricing for data usage, launched an open development initiative (ODI) that approved 29 devices and that VZW’s service held up during last week’s presidential inauguration, despite the strain of significantly higher usage.

In terms of 4G investments, Strigl said that VZW is planning to do LTE market trials later this year and is working with manufacturers to achieve commercial availability within the first half of 2010, despite the delay of the digital transition. The 29 devices borne of the ODI will come online as VZW roles out its LTE devices, he said, adding that these devices are already ready to go on the 3G network.

“Obviously machine-to-machine is the focus of our ODI, and I think we have a good start in that regard,” Strigl said. “The delay of DTV shouldn’t cause a problem. We are trying to work through that issue but certainly later in the year had been our plan on those trials. We are trying to work through with the DTV delay if we can use that spectrum on the trial.”

VZW is still in the early stages of non-messaging services, accounting for its low adoption rates, according to Tobin. She sees these services as having potential to further drive ARPU, particularly from the data component, in smartphone usage. Verizon has also expanded its wireless coverage in the home within the last week, launching the Verizon Hub, a touch-screen landline-wireless hybrid service, the Network Extender femtocell device and shutting down its voice-over IP service VoiceWing to focus on integrating VoIP with its network and other services.

“We think we had a very solid quarter,” Seidenberg concluded on the call. “We had an excellent year and we’ve built solid momentum for 2009. Hopefully you think of us in 2009 as having a solid foundation for innovation. We see no reason that our momentum shouldn’t continue in some way. We don’t have perfect visibility into the economy, so our level of success will be tempered by the economy, but we look to continue to be a formidable competitor in the markets we serve.”