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FIRST ON CNBC: CNBC TRANSCRIPT: INCOMING VERIZON CHIEF EXECUTIVE OFFICER LOWELL McADAM ON CNBC'S "THE STRATEGY SESSION" TODAY

WHEN: TODAY, FRIDAY, JULY 22, 2011

WHERE: CNBC'S "THE STRATEGY SESSION"

Following is the unofficial transcript of a FIRST ON CNBC interview with incoming Verizon CEO Lowell McAdam today on CNBC's "The Strategy Session."

All references must be sourced to CNBC.

The full interview is also available on CNBC.com: http://video.cnbc.com/gallery/?video=3000034613

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DAVID FABER: HIS NEW JOB AS CEO OF THE NATIONS LARGEST WIRELESS COMPANY STARTS A WEEK FROM MONDAY. TODAY VERIZON ANNOUNCING LOWELL McADAM ALREADY THE CHOSEN SUCCESSOR TO IVAN SEIDENBERG, WILL START AS CEO AUGUST 1st. WE'RE HAPPY TO HAVE LOWELL McADAM JOIN US LIVE FROM VERIZON'S HQ IN LOWER MANHATTAN ON A DAY WHEN THE COMPANY REPORTED EARNINGS THAT ARE NOT BEING THAT WELL RECEIVED BY INVESTORS. SORRY TO SAY THAT, LOWELL. CAN YOU HEAR ME, BY THE WAY? I NOTICE YOU --

LOWELL McADAM: YES, DAVID. GOOD TO BE WITH YOU AGAIN. HOW ARE YOU?

FABER: IM DOING OK. IT'S FRIDAY. I CAN'T COMPLAIN. OF COURSE IT IS 100 DEGREES OUT THERE. LET ME START OFF ON A KEY QUESTION THAT I'VE HEARD FROM A NUMBER OF INVESTORS GIVEN TODAY'S EARNINGS REPORT WHICH IS ESSENTIALLY THEY WONDER WHERE THE REVENUE ACCELERATION IS. OVER THE LAST, LET'S CALL IT, HALF A YEAR, YOUR STOCK HAS BEEN UP A LOT, LOWELL, ON PERCEPTION THAT AS LTE REALLY STARTED TO MOVE ALONG HERE. YOU GET PEOPLE UP THE CHAIN IN DATA. RPU WOULD MOVE UP BUT IT HASN'T HAPPENED. WHY? ARE PEOPLE UNWILLING TO PAY FOR HIGHER SPEEDS?

McADAM: I THINK IT IS HAPPENING, DAVID. YOUVE GOT TWO DIFFERENT THINGS GOING ON IN THE MARKETPLACE AT THE SAME TIME HERE. ONE IS THAT WE'RE SEEING NICE SMARTPHONE PENETRATION, SO YOU'RE SEEING THOSE SORT OF 80, $90 RPUS BUT YOURE ALSO SEEING A MAJOR EXPANSION IN OUR INTERNET DEVICES SO THE DONGLES, THE LAPTOPS, THE AIR CARDS, THOSE THINGS ARE DOWN IN THE 50 TO $60 RANGE. IT REMINDS ME A LOT ABOUT WHAT HAPPENED IN THE MARKETPLACE WHEN WE HAD A LOT OF SINGLE LINES AT $50 RPU WE EXPANDED THE MARKET BY GOING TO FAMILY SHARE LINES WHICH WERE DOWN IN THE $10 RANGE. ABSOLUTELY THE RIGHT THING TO DO FOR OUR SHAREHOLDERS. WE'LL ACCELERATE TOP LINE GROWTH OVER THE LONG TERM BUT THE AVERAGE REVENUE PER SUBSCRIBER SEEING A LITTLE BIT OF A DILUTION. WE JUST NEED TO GET THE MARKET COMFORTABLE WITH THAT.

FABER: IS IT TAKING LONGER THAN YOU ANTICIPATED? AGAIN GIVEN THE COMPANY WAS GIVING BULLISH SIGNS ON THIS ROLLOUT, LET'S CALL IT LAST SUMMER IN FACT ABOUT THE REVENUE ACCELERATION. IT DOESN'T SEEM TO BE THERE YET.

McADAM: WELL, I DON'T THINK WE'RE SEEING A BIG SHIFT IN THIS. IT'S JUST A MATTER OF TIME. WE HAVE A TENDENCY TO TRY TO TAKE A SNAPSHOT AT A PARTICULAR CORRIDOR AND I THINK WE NEED TO LOOK AT THIS AS A LONGER PERIOD OF TIME. WE HAD ASSUMED THAT WE WOULD SEE AN iPHONE EARLY IN THE SUMMERTIME AS IT'S BEEN USUALLY,AND THATS GOING TO BE A LITTLE BIT LATER IN THE YEAR NOW. BUT WE REPLACED THAT WITH VERY STRONG LTE DEVICE GROWTH. NOBODY THOUGHT THAT WE WOULD HAVE LTE DEVICES AND WE HAVE NINE OF THEM IN THE MARKETPLACE NOW. HAVE A VERY STRONG LINEUP FOR FOURTH QUARTER. SO I THINK ITS JUST A MATTER OF TIMING AND THE UNDERLYING TRENDS THAT WE SEE ARE VERY ENCOURAGING.

FABER: IS THE PRICING POWER THERE FOR YOU.

McADAM: YOU MEAN FOR DEVICES? OR ON THE SERVICE PRICE?

FABER: CORRECT SERVICE.

McADAM:WE JUST CONVERTED OVER TO TIERED PRICING, DATA TIERED PRICING BECAUSE WE SEE A HUGE WAVE OF VIDEO COMING. AND THAT'S GOING TO TAKE A LOT MORE CAPACITY IN THE INDIVIDUAL NETWORKS, AND SO I THINK FOR A LOT OF CUSTOMERS, THAT WON'T BE AN ISSUE FROM A REVENUE PERSPECTIVE, BUT FOR THE HEAVY USERS, WE DO EXPECT TO SEE THE REVENUE GO UP SIGNIFICANTLY. AGAIN JUST A MATTER OF THE ECOSYSTEM DEVELOPING AND THE ANALYSTS GETTING MORE COMFORTABLE WITH THE MODELS.

DAVID SIMON: HEY LOWELL DAVID SIMON HERE DID YOUR SUBSCRIBER BASE GREATLYINCREASE WHEN YOU GOT THE iPHONE, AND DO CUSTOMERS WANT THE 3-G PHONES OR 4-G PHONES OR DOES IT MATTER BECAUSE IT'S THE iPHONE?

McADAM: WELL I THINK THERE ARE SOME APPLICATIONS THAT REALLY ARE GOING TO PLAY BETTER IN A 4-G ENVIRONMENT.THE LATENCY ON 4-G, THE THROUGH-PUT ON 4-G IS MUCH BETTER. THE IPHONE AND THE 3-G SYSTEM PORTFOLIO SYSTEM WE HAVE ON DEVICES IS VERY STRONG. I THINK THE KEY FOR THE INDUSTRY IS TO NOT JUST TALK ABOUT SPEED FOR SPEED'S SAKE, BUT TALK ABOUT THOSE APPLICATIONS THAT MAKE A DIFFERENCE. IF YOU LOOK AT ONE THAT JUST ANNOUNCED THIS LAST WEEK AROUND OUR ISIS PORTFOLIO WHICH IS THE MOBILE COMMERCE, THAT'S AN APPLICATION THAT YOURE GOING TO WANT HIGH SECURITY YOURE GOING TO WANT VERY STRONG LATENCY AND YOURE GOING TO WANT THROUGH-PUT, AND THAT WILL BE COMING TO MARKET EARLY NEXT YEAR. I THINK IT'S THOSE APPLICATIONS THAT MAKE A DIFFERENCE.

FABER: GIVE ME A SENSE OF THE OVERALL ECONOMIC OUTLOOK FOR THE U.S. THE ENTERPRISE BUSINESS I NOTICED THAT BOTH AT&T AND YOUR OWN NOT PARTICULARLY STRONG RIGHT NOW. IS THAT THE WAY YOU SEE THE U.S. ECONOMY?

McADAM: I THINK THE PORTFOLIO OF SERVICES WE HAVE, YOU SEE SOME PARTS OF THE BUSINESS SEGMENTS THAT ARE A LITTLE BIT UNDER PRESSURE.WHERE WE SEE ROBUST GROWTH, FRANKLY IS THE CLOUD SIDE BECAUSE CUSTOMERS LOOK AT CLOUD AS A WAY TO LOWER THEIR I.T. COSTS. SO WE JUST BOUGHT TERRA MARK.THEY JUST HAD ARE A RECORD QUARTER OF 100 MILLION IN REVENUE. WE'RE MARRYING THAT TOGETHER WITH THE ASSETS WE ALREADY HAD LIKE CYBERTRUST AND ALL OF OUR I.T. INFRASTRUCTURE, I.P. BACKBONES, THOSE ARE DOING VERY VERY WELL FOR US. SO WHILE YOU SEE A LITTLE PRESSURE ON THE LOWER END THERES NOT AS MANY SMALL BUSINESSES STARTING UP AS AN EXAMPLE WE'RE SEEING THAT SHIFT ON THE UPPER END THAT'S KEEPING US WERE BETTER YEAR OVER YEAR THAN WE WERE BY A SIGNIFICANT AMOUNT.

FABER: I GOT TO WRAP IT UP HERE. BUT IVAN SEIDENBERG HAS BEEN RUNNING THIS COMPANY A LONG TIME. I CAN'T REMEMBER WHEN HE WASN'T THE CEO.HOW IS LOWELL McADAMS REIGN AT VERIZON GOING TO DIFFER FROM THAT OF YOUR PREDECESSOR.

McADAM: THE THING ABOUT OUR TRANSITION DAVID IS THAT IVAN HAS THOUGHT THIS THROUGH FOR A LONG PERIOD OF TIME.WE'VE BEEN MAKING PRETTY STRATEGIC DECISIONS AND IVE BEEN DIRECTLY INVOLVED IN A NUMBER OF THOSE LIKE THE GOOGLE PARTNERSHIP, APPLE, TERRAMARK, WHAT WE'RE DOING WITHVODAFONE IS SOMETHING THAT'S IVAN'S BEEN VERY ENCOURAGING. SO ITS A VERY SMOOTH HANDOFF OF THE BATON BECAUSE HE'S GOTTEN ME VERY INVOLVED IN THESE ISSUES OVER THE LAST COUPLE OF YEARS.

FABER: WE HAVE TO LEAVE IT THERE. LOWELL, THANK YOU FOR YOUR TIME.

McADAM: DAVID, GOOD TO TALK TO YOU.

FABER: CONGRATULATIONS. THE VERY SOON TO BE CEO OF VERIZON LOWELL McADAM.

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