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Verizon Eying Tiered Data Plans

by Sean P. Aune | June 20, 2010June 20, 2010 2:19 pm PST

Not that anyone should really be surprised by this, but it appears that Verizon is also toying with the idea of moving to tiered data plans in the wake of AT&T doing so.

It’s becoming obvious that in the mobile arena, data caps are going to become the standard format for data plans.  The mobile carriers simply don’t want want to do unlimited any longer, and so the feeling is that placing caps on the amount you can consume is the only option.  With AT&T’s plans already in place, it was only a matter of time until Verizon, the largest carrier in the United States, followed suit.

lte_logoIn an article from Bloomberg, John Killian, chief financial officer of Verizon Communications Inc said, “We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate.”  This sentiment was echoed by Craig Moffett, analyst at Sanford C. Bernstein & Co. to Bloomberg when he said, “The more bandwidth that you make available, the faster it will be consumed.  From Verizon’s perspective, the last thing you want is for another generation of consumers to be conditioned to the idea that data is always going to be uncapped.”

Apparently this is something Verizon wants in place before it moves into fully rolling out its 4G LTE service.  The fear is that even though the average Verizon smartphone customer consumes between 800 and 900 MBs of data a month, that number will shoot up dramatically with the faster possible speeds.

The part of this whole thing that gets me is that the companies keep stressing how few people use more than 2 GBs, why then do you need to put the fear of overages into the hearts of all your customers, and not just penalize those few?  The answer is rooted in psychology, and that is that with unlimited plans, customers use the plans without concern.  If you put a wall there, people are going to want to avoid that wall, and they are going to be tempted to use their phones even less  because they don’t want to pay overage charges.  While the companies are saying, “Oh, 2 GBs is plenty!”, your average customer has no clue how much that is, and they will dial back their usage.

So, the cellular carriers get to collect more money from the heavy users, and they potentially make more profit off the less use of your standard customers.  As our own Travis Harvey showed when he compared the data plans of the big four carriers, the cost per MB actually went up for the consumer under the new AT&T plans, and you can be assured that Verizon will do the same.

This has nothing to do with making sure the network is more stable as the carriers would like to make you think, this all has to do with their corporate bottom lines, and don’t let anyone try to make you think otherwise.


Sean P. Aune

Sean P. Aune has been a professional technology blogger since July 2007, but his love of tech dates back to at least 1976 when his parents bought...

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