Thursday, May 17, 2012

Verizon Eliminating Unlimited Data For 4G LTE

Verizon Giveth, and Verizon Taketh Away
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I noticed that Verizon will be eliminating it's unlimited plan, even for folks like my wife and I that have been grandfathered in, when people make the upgrade to an 4G LTE phone.  Soon you won't be able to upgrade to anything other than a 4G LTE phone.  We currently plan to upgrade to the 4G LTE iPhone 5 when it comes out.  I believe they are timing this change to happen just prior to the iPhone 5 release, which is rumored to be sometime between June and October.

We don't really NEED unlimited, but I also know this is not a way to save customers money.  This will result in more revenue for Verizon over time with increased data usage on it's faster 4G LTE network.  In addition, Verizon recently added a $30 fee to upgrade your phone, AT&T charges $36 and Sprint $18. 

You can check your usage by logging into your primary account, going under "I want to...Bill...View Bill" and then scrolling down to the data section for each phone number.  I checked our usage over the last 6 months.  The peak usage for my phone is about 1.25GB and my wife averages around 1GB.  We currently pay $30 each for unlimited data.  My guess is that the new shared data will be somewhere between 2-4GB for $60.  I would be disappointed if it was 2GB for $60, ok if it were 4GB for $60 and would be pleasantly surprised if it something like 5GB for $50.  We'll have to wait a bit to find out. 

Would that cause you to reconsider plans to upgrade to a 4G LTE phone if you currently have the unlimited plan?  Would this potentially cause you to upgrade to a 4G LTE phone prior to this new shared plan being implemented to keep the unlimited data?  Curious to know what you think!

Here are two articles on the topic:

Verizon Eliminating Unlimited Data for Users with 4G LTE 

Verizon customers who currently have a $30 per month unlimited data plan will not be able to keep that plan after they migrate to 4G LTE. Verizon plans to offer a data share plan starting mid-summer and 4G LTE customers will have to move to that plan. No pricing details have yet been released regarding the new data share plan.

Verizon Communications CFO, Fran Shammo, spoke at J.P. Morgan’s 40th Annual Global Technology, Media and Telecom conference held this week in Boston. FierceWireless reported that Shammo made the statement that “everyone will be on data share.”

Shammo also stated that he felt that the new plan would make it easier for families and small businesses to use multiple devices on their network. Currently, additional devices require their own data plan, which he believes had been constraining the market.

“A lot of our 3G base is on unlimited. When they migrate off 3G they will have to go to data share. That is beneficial to us,” said Shammo. This will allow Verizon to eventually sunset its unlimited data plans.
The shift to a data share plan will also change one way the industry tracks its success. “Revenue per user” will be replaced with “revenue per account” as a key metric.

It was also noted that by the end of 2013, Verizon’s LTE footprint will be the same as or bigger than its current 3G coverage.

Verizon Wireless to End Unlimited Data For Upgraders

Verizon Wireless is planning this summer to begin forcing smartphone customers with unlimited data plans to switch to tiered plans when they upgrade, the company's chief financial officer told Wall Street analysts on Wednesday.

At the JP Morgan Technology, Media and Telecom conference in Boston, Verizon CFO Fran Shammo said the company will unveil a "data share" pricing model by mid-summer, which will give customers the ability to buy an allotment of data that can be used across multiple devices linked to the same account.

As that plan rolls out, Verizon will discontinue its practice of allowing customers who have legacy unlimited data plans to keep those plans when they buy a new smartphone. Verizon stopped allowing new customers to buy unlimited data plans a year ago.

"As you come through an upgrade cycle and you upgrade in the future, you will have to go onto the data share plan," Shammo said, "[We're] moving away from, if you will, the unlimited world and moving everybody into a tiered structure data share-type plan."

The CFO emphasized that the plan is "paper, not actual." A Verizon Wireless spokesman declined to comment on issue.  AT&T Wireless, which led the industry with the first tiered data plans, continues to allow customers with legacy unlimited plans to keep that service when they upgrade. Sprint remains the only national carrier that offers new customers an unlimited data plan.

The idea behind Verizon's change in strategy, Shammo said, is to increase the company's revenue at a time when the cell phone market is already saturated with customers and voice minutes are dropping, sending average revenue per smartphone user down $10 over the past two years.

As attracting new customers grows more difficult, finding new ways to increase revenue from the customers Verizon already has is becoming the company's top priority.

Though Verizon's lowest, 2 gigabyte-per-month tier currently costs $30 -- the same price as its legacy unlimited offering --- the company knows that data usage is increasing, particularly as 4G-LTE networks make possible huge HD video downloads and machine-to-machine communications.

As customers increase their data usage on their devices, the company thinks they'll move to higher and pricier tiers.

Or, in CFO-ese: "With the construct that we have dealt with around data share and where we see consumption of LTE going, when you put the combination of them together, we are fairly confident that we will see people start to uptake in the tiers, which is really where we will get the revenue accretion in the future."

That's how Shammo put it in his JP Morgan talk. Translation: You're going to suck down more data and pay Verizon more for that privilege.

Dragging existing unlimited customers away from their unlimited data plans isn't the only way Verizon is upping its take. The company recently imposed a $30 "upgrade fee" on customers, which Shammo said has been a success.

"We are really not seeing any impact from a customer base from that fee, so that was the right thing to do," he said.


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