INTERVIEW-Verizon CEO open to dropping mobile phone subsidies

Mon Jan 7, 2013 11:38pm IST

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By Sinead Carew

LAS VEGAS Jan 7 (Reuters) - Verizon Communications (VZ.N) CEO Lowell McAdam is open to eliminating subsidies on mobile phones that sharply reduce the cost of devices to consumers, but said buyers now preferred paying less in exchange for longer-term wireless contracts.

Smaller rival T-Mobile USA, a unit of Deutsche Telekom (DTEGn.DE), has announced a plan to get rid of device subsidies this year but McAdam said it is not clear this would work for Verizon and the rest of the U.S. market.

U.S. operators like AT&T Inc (T.N) and Verizon typically pay handset makers like Apple Inc (AAPL.O) hundreds of dollars for every phone, so they can offer discounts to customers that in turn commit to more lucrative service contracts.

"It’s very intriguing. Every carrier has thought about doing away with subsidies," he told Reuters in an interview at the Consumer Electronics Show in Las Vegas. But "I don’t think U.S. consumers are ready to buy an iPhone for $700.”

The 59-year-old chief executive also urged the Federal Communications Commission to approve several industry mergers and acquisitions in the pipeline.

T-Mobile USA is currently seeking approval to merge with smaller rival MetroPCS Communications Inc PCS.N. Sprint Nextel (S.N) is also looking for approval to sell a 70 percent stake to Japan's Softbank Corp (9984.T).

(Reporting By Sinead Carew; Editing by Bernard Orr)

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