Blogs
I suspect Verizon Wireless’ decision to do away with its $30 unlimited data plan is going to disappoint a lot of consumers.
Unlimited plans provide ease-of-mind to customers worried about expensive overage fees and simplify the process of picking out the right plan. With buffet-style data plans, customers don’t have to worry about how much data they’re using, since they’re charged one flat rate.
Verizon Wireless claims that 95 percent of its subscribers use 2GB or less of data every month. If that’s true, the vast majority of the operator’s new smartphone customers won’t be paying any more for data than current customers who signed up for unlimited plans. As Verizon pitches it, most of their customers can sign up for its $30 per month, 2GB plan and stop subsidizing data hogs.
This argument makes the pricing plans seem more fair to consumers, but the fact remains that at least some of Verizon’s new smartphone customers will pay more for less data. That $30 per month no longer covers all-you-can-eat Web browsing, with its concomitant hours of Facebook status updates and YouTube cat videos.
With Verizon’s new plans, all $30 buys you is 2 GB of data per month, easily eaten up by a single high-resolution video. AT&T and T-Mobile USA charge similar rates for their mobile data plans. Smartphone customers who are heavy mobile Internet users could easily see their data charges under a tiered plan double from what they would have been under an unlimited plan.
That, of course, is the whole point. AT&T, Verizon and T-Mobile all moved to tiered plans because they need to make more money off mobile data and are confident the change won’t deter customers. Sprint, already struggling to compete with its three largest competitors, has oodles of capacity thanks to Clearwire and can still safely use unlimited plans to reel in customers.
Mobile broadband service, for all its promise, has so far proven to be less lucrative than voice. Wireless operators would understandably like to change that, given their multi-billion dollar investments in upgrading their networks. Shifting to tiered pricing is one way to accomplish that.
Operators are encouraging customers to consume more mobile data with high-powered smartphones while simultaneously charging them more for the privilege. It might irk some subscribers and advocacy groups like Public Knowledge, but it will doubtless have a positive effect on operators’ bottom lines.
If the future that so many wireless executives envision comes true – a future where everyone and everything is outfitted with cellular connectivity – usage-based pricing could be incredibly profitable.
Data hogs, as the wireless industry so flatteringly refers to its best customers, are about to pay a lot more for their mobile Internet service. Perhaps we should stop comparing them to pigs and start calling them golden geese.


