David Faber:  -- together there?
I can see it moving around.
Hopefully he is ready.
Lowell McAdam:  Ready to go, David.
 David Faber:  He is outside.
Lowell McAdam:  We're ready.
David Faber:  Good.
The big question is people look at AT&T
and they wonder whether in fact the
company created value from this long-term
association exclusively that it's
had until now with AT&T.
When you tell your shareholders how are
you going to ultimately create shareholder
value from this new relationship
with Apple and the iPhone?
Lowell McAdam:  David, that's really
not a question for us in any way.
If we look at our smartphone portfolio that
we have today, we generate about $100
roughly per customer and it's a very
profitable customer for us, so we have
spent the last year really accelerating
our smartphone base, and we think by
adding the iPhone 4 in 2011, we're going
to see that jump dramatically, which will
deliver significant value
to our shareholders.
David Faber:  There is no exclusivity
period here, I noticed.
In other words, could Sprint also come in
to the market with potentially an iPhone
in the not-too-distant future as well?
Lowell McAdam:  Well, our exclusivity
is around our technology.
We're going to get a huge movement
of customers onto the network because of the
quality of our network.
And as we announced in CES last week,
we are investing in our backbone.
We are investing in 4G LTE.
So we see our exclusivity as by staying
on the leading edge of technology
and delivering a better experience
for customers.
David Faber:  You know, you mentioned LTE,
of course, and many people I speak to
expect that will be the
true game changer here.
What I wonder is if I'm walking into a
store in a few months and there is an
Android phone that I can run on your
LTE network and there is an iPhone there,
why aren't I going to go with the Android
that's going to offer me such faster
speeds, given an iPhone for the 4G network 
is not going to be available for quite
some time?
Lowell McAdam:  Well, it depends on the
experience the customer is looking for,
and we all know the iconic device in the
marketplace over the last several years
has been the iPhone.
All those apps are going to work better on
the most reliable network.
Customers are going to love that.
Over time, LTE will evolve with the
applications, and we've got a great array
of those to start out with, but this is
a tremendous addition to our portfolio
and we are really excited to
have Apple as a partner.
David Faber:  Well, if I am an AT&T customer,
I'm under contract right now,
I have an iPhone, I want to walk into
a Verizon store, I want to break my contract
with AT&T, and I'm willing to move my
number over to Verizon, will you help
subsidize the losses that I may have to
take as an AT&T customer if I want to be
your customer?
Lowell McAdam:  Well, first of
all, David, that's great news.
Give me a call.
I'll be sure to bring you over right away.
But look, we think the incentive for
customers is the network, and that's what
we have heard from customers 
over the last four years.
So we don't think there is a need
for an incentive.
By the way, I'm not going to put any
barriers in front of customers that want
to come, but we're not going to go out
and incent them to come.
They'll come on their own.
David Faber:  Then you have no
data cap on your iPhone plan, correct?
 Or should I say T has a data
cap and you do not, is that right?
Lowell McAdam:  Well, we don't have an
iPhone plan today so we'll announce that
just as we get to launching.
But our smartphone portfolio in general
today, we do have unlimited
options for customers, yes.
David Faber:  And you know, and I wonder
though, what about the iPad?
And when I say that again, I'm coming back
to LTE, which so many people are talking
about as a transformational technology.
At what point is there going to be an
iPad, which I would argue perhaps might be
a lot more bigger product for 4G, that you
conceivably will be offering?
Lowell McAdam:  Well, that's
probably a good argument, David.
 I wouldn't debate that at all.
So here are I think the facts.
Right now, the LTE chipsets
are a little bit bigger.
They take a little bit more power.
So having them on tablets and USBs
is sort of the sweet spot.
And as you saw at CES last week,
we announced that over the first half of the
year, we'll bring more smartphones out,
and that will evolve and I think over time,
it's logical that Apple and Verizon
will be bringing these products to market.
We're just not ready to announce anything
today.
Gary Kaminsky:  Lowell, let's just switch
gears for one second.
This is Gary.
Another issue related to Verizon is the
amount of money you spend on FiOS and how
much you'll continue to spend on FiOS.
Can you give us an update in terms of
where that stands in terms of trying
to figure out cash flow with the company?
Lowell McAdam:  Yes.
Well, we passed about 15 million homes
today and we have said that over time,
we're going to get to 18 million to
fulfill all of our franchise agreements
and we're going to do that.
And I think, Gary, the thing that gets me
excited just moving into this new role as
the chief operating officer is if you look
at the assets we have, between the cloud,
between our 100 Gigabyte-capable backbone,
and between FiOS into the home, and you
look at what's coming -- CES was a great
way to talk about that last week -- all of
the video, all of the data, having
that footprint and that capability in FiOS
gives us the ability to do all the
HD, all the 3D that you want.
We are really the only carrier out there
that is future-proof on the technology.
So I feel very good about FiOS and over
time, we may look at even taking it
broadly if we can show shareholder value.
Gary Kaminsky:  Now you have not, in the
past, bundled FiOS with wireless.
Is that something that you may consider
down the road?
Lowell McAdam:  Absolutely.
And I think our Flex View product that we
launched just in fourth quarter
is just the beginning of that.
And I think the issue has been without LTE,
the video experience on 3G, while it
was certainly better than anything we've
had before, I think as David said,
it really is the game changer.
You can do high definition video across
the country.
You can play games in real time because
of the latency of LTE.
That changes the equation, which is what
brings all those assets that Verizon has
together and we'll use them 
effectively in the market.
David Faber: Final question to Lowell,
will it actually take up your average
revenue per user for data?
Lowell McAdam:  I do believe
it will, absolutely.
If you look back to the wireless side,
that $100 customer, and our focus now
is to go find even more applications
that customers will want so they use the
service, and LTE, the cost structure of
LTE is so much more efficient than 3G.
We do believe it's going
to expand our margins.
David Faber:  Mr. McAdam,
I appreciate your time.
Thanks for standing out
there in the cold.
Glad it's not snowing today.
Lowell McAdam:  All right, David.
 Have a great one.
David Faber:  All right.
Lowell McAdam:  Yes, not so far.
David Faber:  Yes, exactly, not so far.
President of Verizon of course and 
expected to take over from CEO Ivan
Seidenberg at some point this year, Gary.
Gary Kaminsky:  And real interesting
answer in terms of the trying to get
some of the AT&T customers over.
I mean you've walked in and you've gone
into a Verizon store and AT&T store.
You know that there is a
bargaining that goes on.
There is definitely a negotiation.
I believe that he sincerely thinks right
now they won't have to subsidize, but
if you're an AT&T customer and you're in
a contract right now and you want to move
over, I mean do you really think,
David, that they are not going to have
to look at finding a way to get you over?
David Faber:  You know,
it depends on quality.
I mean Verizon was criticized for quite
some time for spending so much money on
their network, but ultimately,
they have benefited from that.
All right, you know what? 
When we come back of course, we want to
resume our Strategy Session --
