Good morning and welcome to the Verizon second quarter 2013 earnings conference call. [Operator instructions.] It is now my pleasure to turn the call over to your host, Mr. Michael Stefanski, senior vice president, investor relations.

Thanks, operator. Good morning, and welcome to our second quarter 2013 earnings conference call. This is Mike Stefanski, and I’m here with our chief financial officer, Fran Shammo. Thank you for joining us this morning Before we get started, let me remind you that our earnings release, financial and operating information, the investor quarterly, and the presentation slides are available on our Investor Relations website. Replays and a transcript of this call will be available on our website later today. I would also like to draw your attention to our safe harbor statement. Information in this presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Discussion of factors that may affect future results is contained in Verizon’s filings with the SEC, which are also available on our website. This presentation contains certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are also available on our website. Before Fran takes you through the details, I would like to make you aware of a non-operational item included in the quarterly results. For the second quarter, we reported earnings of $0.78 per share on a GAAP basis. These results include $147 million after tax, or $0.05, for the favorable effect of an interim actuarial remeasurement associated with one of our pension plans, due to settlement accounting. The noncash credits were due primarily to an increase in the discount rate assumption used to determine our current pension liability. On an adjusted basis, EPS was $0.73, compared with $0.64 a year ago. Our discussion of consolidated results and growth rates in this presentation exclude the effect of the nonoperational gain. In addition, the quarterly growth rates disclosed in this presentation are on a year-over-year basis, unless otherwise noted as sequential. With that, I will now turn the call over to Fran.

Thanks, Mike. Good morning everyone. Our strategic investments in 4G LTE, FiOS, global IP, and cloud services continue to drive strong operating performance. We are executing well in these key growth areas. Overall, consistent top line growth, along a strong focus on cost efficiency and profitably, resulted in double-digit growth in operating income and earnings per share in the second quarter. In fact, we have posted double digit earnings growth in five of the last six quarters. Second quarter adjusted EPS was $0.73, up 14.1%. Year to date, adjusted earnings per share were $1.41, representing 14.6% growth. As you know, our strategy focus is on building networks and platforms as the foundation for innovation and growth. Underpinning our success is the consistent investment in these networks and platforms, which position us to take advantage of growth opportunities in the rapidly evolving wireless and wireline markets for broadband, video, and cloud services. Operationally, we are focused on increasing value by delivering products and services to customers in the most efficient and effective way possible. In wireless, our Share Everything plans are a great example. We have simplified decisions for customers, making it easy to add new devices and manage their shared data usage. Our FiOS Quantum offer, where customers can upgrade broadband speeds themselves, is another example of improving service quality and increasing operational efficiency. Throughout the entire business, there are many examples where Verizon Lean Six Sigma principles are being adopted, and we are realizing efficiency gains in a number of areas, including customer care, supply chain, and system support. As we move through the year, we are confident that successful execution in our key strategic areas will continue to drive incremental revenue and promote operating efficiency, resulting in sustainable growth in free cash flow and earnings. Let me shift…

Fran, thank you. Operator, we’re now ready to take questions.

[Operator instructions.] Our first question comes from Phil Cusick with JPMorgan. Please go ahead with your question.

Two around wireless. First, you talked about sequential improvements in adds in the third and fourth quarter. Given that Sprint’s not going to be seeding a number of items into the market, in what’s traditionally not a strong third quarter, can you help us see why you’re more confident there? And second, can you talk about how you expect margins to track through the remainder of this year? Given the upgrade comment you just made about being flat year over year, that’s a little higher than I would have thought given the commentary, or the change for the fourth quarter. Can you just talk about those?

On the sequential third and fourth quarter, it’s similar to the trend that we saw last year when coming out of the first and second quarter. We said we would sequentially continue to see growth in the third and fourth quarter. And again, this is around what we expect the roadmap to be on additional device launches throughout the third and fourth quarter. But the momentum that we have, and you see that momentum coming out of second quarter, and I’ll talk more to that in a second when we get to the margins, we continue to see this high-quality subscriber coming onto the wireless 4G LTE network, and we don’t see that changing at this point. From a Sprint and porting ratio, I won’t get into specific individual carriers, but again, pretty consistently positive with all carriers from a porting ratio perspective. On the margin side of the house, I think we have to put this in perspective. Again, we are fully engaged on the 49-50% guidance that I gave to you in the beginning of the year , and if you look at the first half of the year at 50.1% for the first half and coming out of this quarter at 49.8%. And I think you have to look at what’s behind that. So if you look at, on a year over year basis, just between the quarters, we improved our profitably by 80 basis points. In that, if you look at that, we moved 7.5 million smartphones. 1.6 million of that was additional smartphones over last year. And then if you just look at the 4G devices, we moved 3.1 million more 4G devices this year than we did a year ago. And in that, if you look at the service revenue growth of 8.3%, that’s…

Our next question comes from Jason Armstrong of Goldman Sachs. Your line is open.

Fran, there’s been obviously some buzz around Verizon investing in Canada. Maybe you can help us in terms of where you see the opportunity. Is this tied into a roaming footprint? Is it tied to maybe serving your own enterprise customer base? Or is there sort of a consumer retail presence you might have in mind tied to this? And then second question, on FiOS, very good volumes in what’s generally a seasonally weak quarter. You talked about the 600 plus, that it seems like you have the opportunity to maybe be meaningfully above that result. I’m just wondering, does what you’ve seen in Q2 give you the opportunity to maybe set the bar higher for the year?

On Canada, again, let me emphasize this is really an exploratory exercise for us. As you all know, they’ve delayed their spectrum auction until January. So, again, we continue to just look at this market. I think it’s everything that you said that we’re kind of looking at. If you look at the population of Canada, about 70% of that population is between Toronto and Quebec. That’s adjacent to the Verizon Wireless properties. Again, if you look at the spectrum auction, it mirrors up exactly what we launched here in the United States on the 700 MHz contiguous footprint. So we’re looking at all these, but obviously some of the cautions here are the regulatory environment, a foreign investor coming into the Canadian market and what does that mean? So again, cautiously looking at it. Not ready to make any announcements today. And we continue to explore and have discussions, but at this point it’s just really an exploratory exercise. On the FiOS volumes, again we put a lot of effort around continuing the superiority of the FiOS product. Bobby and his team have done a great job in and around the FiOS Quantum offers and a lot of the stimulated growth that we see here is coming from the Quantum offers that we have, and upgrading those Quantum offers to the 50 and 70 MB per second services. So look, we set a target for 600,000. Obviously if we can exceed that target, we will. We’re ahead of that target, but I will tell you that the third quarter, again, is always a seasonally challenging quarter for us from a move perspective. So let’s continue on the track that we are, and if we can overdeliver, we will, but we’ve set the target at 600,000.

Our next question comes from John Hodulik of UBS. Your line is open.

Quick question on wireline and then wireless. First, on wireline, Fran, in your prepared remarks you mentioned a couple of issues driving wireline profitability, that you see some improvement. I just wanted to see if I could get a little clarification. Are you talking about the year over year trends for the whole year? Or just the second half? If you could just sort of fill in the blanks for us, that would be great. And then secondly, on the wireless capex increase, can you just talk a little bit about what’s driving that? Is it more 4G devices? Is it more usage per device? Or is it maybe the competitive environment and what you’re seeing from other carriers? What’s really driving the change there?

So in wireline possibility, look, we set the bar that said our margin would be flat year over year. Going into obviously in the third and fourth quarters of last year, compared to what we think we can do this year, and coming out of the second quarter, I think in the back half I have to improve the profitability in order to continue to make that guidance that we set out at the beginning of the year that said we would be flat on a margin basis. So I think we’re on course to do that, and mathematically, the profit has to get better in the back half of the year in order to sustain that guidance. As far as the capex on wireless goes, there’s a couple of things here that are driving this. If you look at, over the last three quarters, the growth that we’ve had, the number of 4G devices we’ve moved, and if you look at just the first half of this year versus the first half of last year, we’ve added 6.2 million more 4G devices on the 4G network than we had a year ago, from just an overall sale perspective. So when you look at that and you look at the usage, currently 59% of the data traffic is now running on the 4G network. And that’s being driven by 33% of the base. So again, from just a growth perspective on the top line, we’ve always said, again, that as customers move into shared, and they realize the viability and speeds, and the consistency of this 4G network, it’s going to drive them to use higher usage. And if you look at where video’s going in the future, obviously that’s going to continue the proliferation of the usage on this network. And we look out two years ahead of where we think our curve is going to be, and given the past success we’ve had, and the usage patterns, and the amount of 4G devices that we’ve already moved, and the roadmap that we see coming, we need to accelerate really the capacity that we previously thought. And it’s really all to drive what customers want. So the incremental investment will more than pay for itself on top line growth, from what I see. And again, this is really a shift in our capital discipline between wireline and wireless. And we’re going to maintain our lead on the most reliable, consistent 4G LTE network. So that’s what’s driving the increase for the capex.

Our next question comes from Simon Flannery of Morgan Stanley. Your line is open.

Other wireless service revenues were very strong, up about 20% year over year. I imagine you’ve got some MBNOs and maybe roaming and other stuff. Perhaps you could just comment on the drivers of that and the sustainability of that. And then on the enterprise side, you talked about continued cautious behavior and cost focus. Do you see any signs of a second half pickup? I think there’s some better news on unemployment and generally macro trends improving in the second half. Are you seeing any of that? Or is it pretty much static from your point of view?

On the other wireless revenue, obviously what’s included in that other wireless revenue is our reseller base. I don’t like to refer to them as MBNOs. That’s a bad word for me. But on the reseller base, it’s really driven from the prepaid providers that we have on that side of the business. And again, coming out of this quarter, we did a fairly substantial number of net adds there. And again, our prepay strategy is between what we sell on the retail side under our own brand, and we had a positive quarter again this quarter, with 97,000 net adds. But we also drive the, if you want, the lower-end market through resellers, and mainly through the relationship with Walmart, through Tracfone. So that drives a lot of volume, and that has been good revenue growth for us. The other things I would tell you, though, is that in addition to that, obviously roaming is in there, machine-to-machine , which we don’t really talk about much. We’re gaining a lot of momentum around machine-to-machine, and that is driving incremental revenue, albeit very low individual unit per subscriber type revenues, but again, as we start to gain momentum and sell hundreds and hundreds of thousands of these types of devices, that’s going to contribute to those revenues and contribute to the overall growth of wireless. So that’s the component of that. On the enterprise side, look, I understand the unemployment is there, but it’s not large enough and steady enough to give me confidence that something’s going to turn here in the near future. And again, if you look at the enterprise space, mainly what everybody is focused on is cutting their costs. And obviously when we talk about cutting costs in enterprise, they come to us and figure out…

Our next question comes from Michael Rollins of Citi Investment Research. Your line is open.

Could you just give us the update on the net debt calculation for Verizon Wireless? And then with respect to the business, I think the metrics that you threw out there on the LTE network implies about 1.8 more usage on the LTE network versus the 3G network. And I was wondering if you could expand on that a little bit more, and maybe give us a sense of what the usage trends are for your customers. And as they move into the shared data plans, if you could give us a sense of that kind of stimulus that you’re seeing on the consumption front.

On the update of the net debt for wireless growth, that is $10.1 billion, and net debt is $9.7 billion. And as you know, we did a distribution at the end of June of a total of $7 billion out of the partnership to both of the owners. And also, just to keep in focus here, we have about $1.5 billion of wireless debt coming due in the fourth quarter of this year and another approximately $3.5 billion coming due in the first quarter of next year, and we plan to pay that debt off at that point in time. On the LTE network, you’re right on. Obviously what’s happening is as people come from the 3G network over to the 4G network, you can see that incremental usage, whether it’s a smartphone or a jet pack or a dongle. And as they start to share all this data, the video consumption is increasing year over year and quarter over quarter. Others in the industry have put out their projections of usage over the 4G data, if you look at some of the things that people have printed, and the escalation that the future holds from a data consumption standpoint as we start to move into more symmetry between in the home and out of the home content. We don’t see that slowing, so again, yes, we do see an incredible jump when someone moves from 3G to 4G and the usage that they have on their smartphones and other devices. So that’s what’s driving the growth.

Our next question comes from Mike McCormack of Nomura. Your line is open.

Maybe just a comment on wireless margin. I know you’ve got the sort of 49-50% expectation for the full year. Last year the fourth quarter had very high volumes that sort of really dragged down margins a bit. Are you getting comfort that the new upgrade policy should have a muting impact on that? And then just secondly, on FiOS competition, maybe just some comments regarding the triple play pricing environment out there, and also how well you’re doing in the [MDU] market.

On the wireless margins, obviously, again, we’re very confident around the 49-50%. As far as the fourth quarter of last year, you have to keep in mind it was the first quarter that there was a free iPhone on the Verizon Wireless network, and we won’t have that repeated this fourth quarter. Now, that’s not to say that we don’t see increasing volume. And again, I continue to say that we’ll see incremental net adds through the third and into the fourth quarter. But from a margin perspective, if you look at just year over year and the amount of volume we’ve moved, we actually ate through all that volume and improved the profitability of this business. And that goes into managing the entire business. So from an upgrade policy standpoint, some other things that we’ll be launching. You probably saw Verizon Edge and some other options that we’ll have on payment plans for our customers to acquire a smartphone. All of these things considered, we are very, very positive on the margin progress and the profitability progress of Verizon Wireless and the continued growth of Verizon Wireless.

Just on the Edge comment, is that something that you’re hearing your customers actually demanding, the sort of equipment financing option?

If you look back, we were the first carrier to launch LTE technology, we were the first ones to launch the shared pricing around LTE technology. We launched in the fourth quarter of last year an installment pay plan on tablets. That was something that our customers were asking for. We delivered that to them. And at that point in time, we started to look at it, and I said we were looking at other options for smartphones. We’ve done a lot of focus groups in the last six months. We’ve done a lot of market research. And yes, our customers are asking for another option. Twofold: Number one, we have a lot of customers on the technology edge that want to be able to upgrade sooner than they would under our historical legacy subsidy model, if you will. And we have other customers who quite honestly don’t want to pay up front for the large cost of the phone. They’d rather pay over time. So I’m not going to get into all the details of Verizon Edge, I’ll let Wireless do that, but that’s something that our customers have been asking for, and I think we have a differentiated plan to launch to the market and Verizon Wireless will have more to say on that. Going back to your other question on triple play and MDU, obviously we continue to gain momentum here. Look, this business has always been competitive around the triple play, but I think what’s differentiating us right now is the superiority of our product with fiber into the home. And as you get that fiber into the home, I think what customers are realizing, and we see this with the copper to fiber migration, when they move, and they see the speed that they can get on their internet capacity, we’re seeing customers upgrade. And what I’ve said is we’re seeing our legacy copper customers, who we have migrated over to the FiOS network, they are paying between $10 and $15 more in RPU a month after about 60 days on our network, because they’re upgrading freely into that 30 and 50 MB per second. So that’s really what’s differentiating us in the market. We will continue to advertise around that superiority, and I think that momentum will carry us into the third and fourth quarters.

Just a quick follow up on the FiOS side. Is there a point at which you guys are going to migrate to an all-IP video network?

Obviously we’ve already started that with the copper to fiber migration, but that’s going to be quite some time in order to deactivate the copper switches and take all that plant and equipment out. We have the plans to do that, but that’s not something that’s going to be done within this year or next year.

Our next question comes from Jennifer Fritzsche of Wells Fargo. Your line is open.

I did want to ask about prepay. With AT&T doing [AIO] and now with Leap’s purchase and Cricket in the fold, and T-Mobile and Sprint obviously having their own brands, is there any interest on your part in launching an independent prepay brand under Verizon, separate from Verizon?

I think from a prepay perspective, we are very happy with how we approach this market, between our own prepaid product, which obviously you’ve heard me talk about in the past, which is just strictly on our 3G network. We do not offer prepaid on the 4G LTE network. And as I said, we will become more aggressive over time in the prepaid market on that 3G network. Because again, as we look at the 3G versus the 4G, and we move 3G customers into our 4G network, we want to make sure that we keep that 3G network as full as possible, because when you think from an investment return, we’re not investing any more in that network, and the fuller we can keep that network without detrimenting the service, the contribution margin of that network is very, very high. So prepaid is really the pillar of how we will continue to utilize that 3G network, so you’ll see us become more aggressive around that when we need to be. You saw us change some pricing in the last two quarters around prepaid, and that has stimulated some growth for us. And then as I said previously, our other path is through resellers for the lower end market. I don’t see the need, at this point, to do a secondary brand around the Verizon Wireless network. We have built our brand around the quality, the reliability, a superior network. I don’t think that a secondary brand helps our overall brand at that point. The other thing I’ll say is I’m not going to comment on anything around the AT&T deal with Leap, but I will put to bed the rumors out there that Verizon Wireless may be interested in that asset. And [hear me], we’re not interested in that asset.

Our next question comes from Brett Feldman with Deutsche Bank. Your line is open.

I’m not going to ask you about Leap, but that deal is spectrum-driven, and you guys have indicated that you’re starting to deploy your AWS-1 spectrum, and maybe that’s happening a little sooner than we thought, although you’re seeing network traffic ramp very quickly. I’m just curious if you can maybe give us a status update on your spectrum portfolio. Do you still feel like you have sufficient spectrum to get to the next auction? Do you still see an opportunity to buy spectrum in the market right now from other carriers? And have you started to think about maybe some supplemental solutions, for example maybe revisiting wifi, as another way to put capacity into your network?

Around spectrum, we did our AWS deal last year, and that put us in a very good spot for our 4G LTE strategy. We started to launch AWS last year. We started to preposition that. We are accelerating the positioning of the AWS based on my comments before around the usage around wireless. But again, we are very comfortable with our spectrum holdings, and we are in good shape for three to four years. Obviously we will participate in the auction with the FCC targeted for 2014 around the broadcast licenses. That’s something that we will participate in. But we are not under any spectrum pressure. If you look at our frequencies, and the way we deployed our CDMA spectrum, we can actually take very small slivers out of that CDMA spectrum and reallocate that to our 4G LTE spectrum on a needed basis. And that’s where we get into this balancing act between the 3G network and the 4G network. But we are very satisfied with our holdings for the next three to four years. Obviously we’re always opportunistic in spectrum acquisition, and we do actually buy spectrum every quarter. You probably don’t see it, because we do little markets here and there. But look, we’re always opportunistic, but at this point, we’re satisfied, and there’s nothing out there at this point other than the auction that we’re concentrating on.

And on wifi, anything new there maybe involving your cable partners?

From a wifi perspective, obviously we always like people to offload when they’re in their home on a secured wifi network. You’ve heard me talk before about wifi networks are not secure in the public domain. They have a purpose for us in certain instances around major sporting events and so forth, but our customers are very concerned about their privacy and security. That’s why they ride the LTE network as much as they do. But we do want offload in certain circumstances, and so that does relieve some of the spectrum. We obviously, just from a utilization standpoint, for people that are in their homes, it’s not good and efficient to run off the LTE network. They should shift over to their wifi network in their house. So we do encourage that, but again, not major, massive, public wifi is interesting for our customers, at least at this point in time, from a security standpoint.

Our next question comes from David Barden of Bank of America Merrill Lynch. Your line is open.

Just following up a little bit on that, Fran, I was wondering if you could give us a status update on the activities and development that’s going on inside that joint innovation entity with the Comcast group, and what progress, if any, is being made on some of the digital content rights stuff? And then I guess second would be kind of along those lines. Could you elaborate a little bit on your relationship with NFL, and kind of some of the strategy behind that content relationship and if that’s the beginning of a series of potential new moves to acquire content? And if I could, just one quick last one, I noticed the strategic services sales and enterprise were a a little over 6% growth year over year last quarter. They kind of slowed down into the 4% zipcode this quarter. I know overall enterprise has been fairly soft, but strategic services has been kind of a core strength. If you could kind of address that slowdown, it would be helpful.

Around our joint venture with the cable companies, obviously our [unintelligible] solutions team has been working and defining consumers as to what they want both in the home and outside the home. And obviously what we’re learning is the 4G LTE network plays a very critical role in that. We continue to work with them. We have expanded into 968 Verizon Wireless stores across the U.S., and we have about 2,500 indirect locations, the marketing material, and we continue to showcase these types of products. But I will say that as we continue to work through this, it’s hard for Verizon Wireless to sell a cable product outside of the FiOS footprint, because it’s new. And it’s hard for the cable companies to sell a wireless product outside the footprint, because of the distribution channels. So as we continue to work through this, we’re gaining some momentum here. But I think the one last point from all this is we’re obviously very focused on the content rights. And you come into the NFL agreement, and the NFL agreement we think is just a new way of how content rights can be delivered into the wireless segment. And obviously our strategy is around both type of multicasting a live sporting event, and you saw our comments that the 2014 Super Bowl will be a multicast type event to our wireless customers. So that’s really the breakdown of the wall between what can be delivered in the home and out of the home. And obviously we now have the rights to take some of the NFL live games out of the home and deliver them on the mobile devices. From a content standpoint, this has to develop, obviously, over time. The other point here around content is we are starting to see where we’re getting inquiries from content providers that they may want to pay for their content rather than having the consumer pay. Those models are still being worked, but we’ll see where that goes. But I look at that as the old 1-800 number, where the actual vendor pays for the usage, and not the customer. So we’ll see how that strategy develops over the course of time. As far as our strategic services go, we continue to have good momentum in our strat services as we refine exactly what we’re doing. We have very good momentum in the Terremark and the Hughes platforms, and around our cloud services. The slowdown, quite honestly, has been around our PIP exercise, and that is growing, but it’s more a price compression within the industry. So we’re facing some of that going forward. And we knew we were going to face some price compression around PIP, and we have to accelerate on the other strategic services to outpace that. So, other than that, we have good momentum on strat services.

And just to clarify, PIP is?

IP-based solutions.

Our next question comes from Tom Seitz of Jefferies. Your line is open.

Can you just give us an update on your expectations for VoLTE?

We’re still on course for VoLTE. We will start testing and have our first handset in the market at the end of the year. And then we will probably commercial launch sometime next year. But again, as I’ve said in the past, the critical piece for us is that we have to make sure that our 4G LTE coverage footprint from a VoLTE standpoint equates to our 3G footprint, because the VoLTE call is not backwards compatible with the CDMA network. So when you establish a call on VoLTE, within our network, if you move outside of the LTE network, you will have a hard drop on that call. And obviously that’s not something that our customers would expect from a premium provider like Verizon Wireless. So we’re taking our time here. We will thoroughly test this. But we are on track to commercially launch sometime in the first half of next year. And then taking that out, as I’ve said, at the end of next year, we are on track to have our first only LTE handset to be able to provide to the marketplace as well. So we’re still on track with our VoLTE strategy, but it is a critical one for us to make sure that we get right when we launch.

So the implication, though, then, is that the 4G network is going to be essentially everywhere that the 3G network is by sometime in the first half of next year?

The 4G network is everywhere. As I said in my opening remarks, 99% of the coverage of our 4G network is equivalent to our 3G network. But now we have to go back in and fill in that capacity to make sure that from a voice call perspective, it will hand off, because voice is different than the data piece. So we just have to make sure that a customer who is on 3G today, when they go to VoLTE, they would see no difference in their service from 3G to 4G.

Could I just follow up on Dave’s question? There were press reports that ESPN was considering subsidizing mobile video consumption. And you sort of alluded to that as well. How soon do you think we’ll see a material third party payer model? Is it this year? Is it next? Is it a couple of years out? Can you just sort of frame the timeframe of what you’re thinking about?

I think the big barrier right now is how does the content provider get the value of how many people watch their content on a mobile device to be able to go back to their advertisers in order to monetize that content? And right now that’s where the barrier is, and we’re working on that. But until that get solved, I think this model will be slow at this point in time. Now, slow to come, I’m thinking maybe next year. But it’s certainly not any time in this year that that model will break through. Because they have to recognize the benefit back to their advertisers to be able to monetize that content into our network. But it is something that’s being discussed. They realize that the linear model will not work as it does in TV in the wireless market. You can’t assume that someone’s going to pay $8 a sub on 100 million subs, so that model does not work. So we are looking at other models, but the barrier is how do you measure everything to get back to the advertisers for the perceived value on that content?

Our next question is from Amir Rozwadowski of Barclays. Your line is open.

Just on the capital expenditure front, on the back of this capital expenditure rise for the year, I wanted to ask how we should think about the capital intensity of the business going forward. It does seem as though your competitors are healthily ramping their efforts to try and improve service quality. Do you feel as though you’ll need to continue to put your foot on the gas in order to maintain the quality of your network?

Well, let’s put this in perspective. We’ve moved our consensus by $200 million to $400 million, so this is not a huge step up in our capital spend. We just wanted to make sure everybody realized that we were going to accelerate some of the 4G LTE. But as we’ve said in the past, and if you look at our results through the first half of the year, we continue to really be disciplined around the capital investment across our businesses, but also within the wireline segments. So you see that come down year over year. We expect that trend to continue. So that will offset some of the pressure that we may see on the wireless side. So I don’t anticipate that there’s going to be any major accelerations, but again, it’s too soon to tell where we’re going to come out in ’13. I’ll talk more about that in the coming quarters, but right now the focus is on this year and it’s between $200 million and $400 million increment.

If I may, we’ve clearly seen a pickup in terms of your shared data plans. I think you mentioned that it’s more than 36% of your subscribers that are on these plans. I was thinking from a strategic perspective, as we’ve seen increased promotional activities by some of your competitors to try and wean subscribers onto their networks, do you feel as though this is a potential mode in terms of protecting your subscriber base from some of these more aggressive pricing plans that are available in the market? Should we expect to see more promotional activity to try and ratchet this sort of percent of subscribers on shared data plans up in the coming quarters?

This industry has always been an extremely competitive industry, and obviously some of the promotions around unlimited have been there for the last year, when we launched share pricing. And we continue to take market share, we continue to grow our revenue very strongly. So look, I mean, Verizon Wireless will do one thing very well. They will compete very well in the market, but we are a balanced company. We will compete, grow revenue, grow profitability, and grow our subscribers. And at the end of the day, customers make choices not really just on price, but the quality of the network, and that’s what we’ve built our brand on. So quality of the network, consistency of the network, the reliability of the network, the value that we provide to our customers through these shared plans. And again, will we do promos here and there? Of course. As I said before, we’ll launch the Verizon Edge, which will give our customers yet another choice of how do they want to enter onto the best network there. So I think the key here is give our customers choice, and continue with what we’ve built our company on, which is the strongest network.

Our last question comes from Tim Horan of Oppenheimer. Your line is open.

Two questions on wireless. Fran, you talked about the fact that your LTE network is enabling you to attract a higher quality customer, which has clearly been the case for a long time with your network. But do you have any evidence on that on maybe credit scores? Are you finding with what you’ve done on LTE and the shared data plans, are you attracting higher credit quality scores, maybe losing lower quality score customers? And then secondly, on the shared data plans, can you maybe talk about what you’re seeing in terms of customers needing to increase their data buckets or many customers bumping up against headroom? Or do you expect to see an acceleration of that in the next year? Or is it more like two to three years out?

On the high quality, obviously we give a lot of our customers choice of various price plans and how to enter into our superior network. And of course credit scores have always been a component of that. I won’t really get into how we differentiate the credit scores, but obviously you can see that from the growth that we have and the revenue growth that we have, this is not a major issue for us. And we watch this very closely, but we’re gaining customers across all aspects of the business, let’s just put it that way. Shared data plan, as far as acceleration of data usage, again, what we see, and if you’ve experienced this yourselves, we continually communicate with our customers throughout the month as to when they get to their usage, and then when they get up into that 90%, we give them the ability to upgrade through their phone to the next tier. And we see some very good results from that. Customers are upgrading when they need to. So, again, based on our trajectory of data usage, especially with where we see video going, we continue to see that the uptake in the shared plan will continue, the usage will continue to accelerate, and our revenue growth will be reflective of that.

That’s all the time we have for questions. But before we end the call, I’d like to turn the call back to Fran for some closing comments.

Thanks, Mike. I just want to leave just a couple points of emphasis here. Our strategic investments and operational execution drove strong financial performance in the first half of this year. But while we are pleased with the overall performance, we obviously know we have more work to do. We are committed to driving shareholder value by continuing to execute our strategy and improve on the fundamentals of the business. We are focused on delivering superior customer service and providing the best portfolio of products, along with the most reliable and consistent performing network. Our focus is to capture incremental revenue growth in our key strategic areas while we also transform our service delivery and cost structure. As always, we will continue to be very disciplined around our capital investments, investing in those platforms for the innovation and the growth of the future. Through this strategy and execution model, we expect to drive incremental cash flow and earnings growth, both in the second half of this year and into the future. Thank you again for joining us, and everybody have a great day.