Verizon will replace its $30 unlimited data plan with usage-based pricing this summer, when Apple will likely introduce the next generation of its iPhone.
Verizon Wireless plans to
replace its $30 unlimited data plan with usage-based pricing toward the middle
of this summer, Chief Financial Officer Fran Shammo said during a Morgan
Stanley telecom conference.
After competitor AT&T's
three years of exclusive rights to the Apple iPhone, Verizon began offering a
CDMA-based (Code Division Multiple Access-based) version of the Apple iPhone 4 Feb.
10. (AT&T, by contrast, offers a GSM-based version.) The timing of
Verizon's new pricing plan, however, is expected to coincide with the launch of
a next-generation Apple iPhone-a scenario that's likely to upset Verizon's new
iPhone owners, who will find themselves with an "older" model in only
a matter of months. It could also upset Verizon's financials in the short term.
"There could be some
[margin] lumpiness when you launch the phone," Shammo said during the
March 1 conference, according to Reuters. "If there happens to be a new
one that comes out, that quarter might not look so good [either]."
Shammo added that the
unlimited plan was never meant to be a long-term strategy.
Former Verizon CFO John
Killian, who retired from the position at the end of last year, had
confirmed during Verizon's third-quarter earnings call Oct. 22,
2010, that a $30 unlimited plan would be offered, as well as a $15 plan for
150MB of data. The plan, Killian said at the time, was to attract, with the $15
offer, first-time smartphone owners, who would eventually upgrade to the $30
plan. Shammo seemed to believe the $30 plan was encouragement in itself.
"Let's step back. Why
did we do the unlimited $30 plan on the iPhone?" Shammo said during the
conference, according to Fast Company. "Well, the reason we did
that was we didn't really want to put up a barrier to anybody who wanted to
come over to experience the Verizon wireless network."
While Verizon's shares fell,
following Shammo's comments, the move to usage-based plans is expected to
benefit the carrier's bottom line over time.
He didn't directly address
reports that Apple is working on a smaller, less-expensive version of the
iPhone that will be geared, according to Needham & Co. analyst Charlie
Wolf, toward "100 percent" of the mobile phone market,
instead of a quarter of the market.
Bloomberg has reported that
the small iPhone won't include a "home" button.
"Apple would sell it at
a low price mainly because the smartphone will
use a processor, display and other components similar to those used in the
current model, rather than pricier, more advanced parts that will be in the
next iPhone," Bloomberg reported.
A teardown of the Verizon
iPhone 4 by repair site iFixit found that Apple has replaced the AT&T
iPhone's Broadcom GPS chip with a Qualcomm MDM600-which supports both CDMA and
"Can it be that Apple's
thinking of using this chip in the iPad 2? Or maybe when the iPhone 5 is
released, there will be just one phone for both Verizon and AT&T? That
would be great," iFixit's M.J. said in a video on the site.
Or maybe, Apple is just
preparing for its less-expensive offering. Shammo, too, hinted at the growing
need for lower-priced smartphones during the conference.
"With the competition
that's coming from China and some other manufacturers, it's going to push that
smartphone price down, which means more and more people will be able to afford
it," Shammo said, according to the Fast Company report. "We have got
to give them an entry point."
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.