Verizon Killing 'Grandfathered' Unlimited Plans as Carrier Moves to 4G

 
 
By Michelle Maisto  |  Posted 2012-05-17
 
 
 

Verizon Wireless customers taking advantage of a grandfather clause to hang on to their $30 unlimited data plans when the carrier did away with them  in favor of tiered pricing last summer, won€™t be able to hold on to them once they upgrade from 3G to 4G Long-Term Evolution (LTE), CFO Fran Shammo said May 16, speaking at the J.P. Morgan Technology, Media and Telecom conference.

This summer, Verizon plans to roll out, as a complement to its LTE network, shared-data plans, which will enable a set amount of data to be shared between multiple devices and even multiple users. Families or small-business employees, for example, will be able to share a data bucket, as it were. Or individuals formerly not wanting to take out a separate contract for a tablet could share their data allotment between their smartphones and their tablets.

When asked by JP Morgan analyst Phil Cusick how Verizon plans to drive customers over to the new model, Shammo explained: €œAs you come through an upgrade cycle and you upgrade in the future, you will have to go onto the data-share plan, moving away from, if you will, the unlimited world, and moving everybody into a tiered-structure data-share-type plan.€

Shammo added that €œa lot€ of Verizon€™s 3G base is still on the unlimited plan. (Indeed, a lot of Verizon€™s base is still using feature phones; even T-Mobile has a higher smartphone user percentage.)

€œAs they start to migrate into 4G,€ Shammo reiterated, €œthey will have to come off of unlimited and go into the data-share plan. And that is beneficial for us for many reasons, obviously.€

Verizon has not yet shared the details of the data-share plans but released a statement the same day saying, €œWe are working on plans to provide customers with that option later this year. We will share specific details of the plans and any related policy changes well in advance of their introduction, so customers will have time to evaluate their choices and make the best decisions for their wireless service.€

For those $30 3G holdouts, a likely motivator for the switch to 4G may be the newest Apple iPhone€”the so called iPhone 5€”likely to arrive around September and, no doubt, with 4G capabilities on board.

Shammo called the data-share plans, which Verizon €œspent a year on developing€ a €œwin-win€€”a win for Verizon and a win for consumers.

When Cusick noted that the industry €œseems to be slowing down from a subscriber base€ and asked how the wireless industry plans to keep growing, Shammo further described how the win will play out on the Verizon side.

Shammo explained:

€¦ If you just look at Apple iPad sales, for example, I think they have sold 40 million. Now, that is worldwide, but a large percentage of that has happened in the United States. If you look at who has connected those to a wireless network, that percentage is fairly small. So as we go into data-share plans and get folks to be able to share that data across all of their devices, I think you're going to see the industry start to pick up a lot of that activation that hasn't been there before. So €¦ I think we still have a growth plan here from additional connections, if you will, and moving away from this postpaid, net-add nomenclature. It is really going to be around the connections and then obviously the generation of revenue going forward. And I see that as a positive moving forward.

While news of the upgrade to 4G voiding grandfathered plans may come as a surprise, Verizon has been speaking for some time about its intentions to offer shared data.

At least as early as May 2011, Shammo told attendees at the Reuters Global Technology Summit, €œAt some point, you are going to have mega-plans [for data], and people are going to share that mega-plan based on the number of devices within their family.€

Follow me on Twitter: @eWEEK_Michelle.

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