Fran Shammo, CFO of Verizon Communications, believes the impact of subsidising smartphones and LTE devices will soften as supplier competition increases and CDMA chipsets are phased out.

At the presentation of Q1 financial results for Verizon Communications, which owns 55 per cent of Verizon Wireless, Shammo gave no indication that the biggest mobile operator in the US would be following T-Mobile USA and start separating the cost of devices from contract tariffs.

Instead, Shammo is counting on increased smartphone competition – such as the arrival of the latest Blackberry and Windows Phone devices – to lower costs and bring down subsidy levels.

“We’ve already seen some of this competition happen in certain categories,” said Shammo, pointing to the launch of low-end smartphones for the pre-paid market. “We really don’t subsidise much on the prepaid product,” he added.

Moreover, Shammo anticipates the launch of Verizon Wireless’ first non-CDMA devices in 2014, as the company’s LTE rollout continues. “Again, that will impact subsidy going forward,” said Shammo. “We believe that we can start to reduce subsidy over a length of two to three years.”

Shammo also believes the operator’s first VoLTE-capable handsets may well be out by the end of the year.

Verizon Wireless has been expanding its LTE network and 4G subscriber base at a rapid clip. In the first quarter, Verizon Wireless’s smartphone activations totalled 7.2 million, nearly 70 per cent of which where LTE-capable.

Over the same period, Verizon Wireless activated 4 million iPhones, evenly split between LTE and 3G-only versions.

As of 31 March, Verizon Wireless reports that LTE phones and devices represented more than 28 per cent of its total post-paid connections. Moreover, 40 per cent of its smartphones and 63 per cent of its internet devices, out in the market, are now LTE-enabled.