Verizon's 4G LTE Pricing May Not Be Best Available Deal

 
 
By Wayne Rash  |  Posted 2010-12-04
 
 
 

Verizon's 4G LTE Pricing May Not Be Best Available Deal


At first glance, the pricing plan that Verizon Wireless announced for its 4G LTE service on Dec. 1 didn't seem like a bad deal. For $50 you get 5 GB of data, and you pay $10 for every gigabyte over that.  

Alternatively, you can pay $80 for 10 GB of data per month, and then pay $10 per gigabyte for the overage. Sounds reasonable, given the high speeds available, the low latency, and the fact that the initial devices will be for laptop computers, so you don't have to worry about voice minutes. 

But is it really a good deal? And is it a good deal over the long term? Those LTE USB devices will cost you $99 only if you sign up for a two year contract. You can get them without a contract, but they'll cost $249. Compare these rates against the competition, and you'll find that a great deal depends on how you plan to use your 4G device, and how much data you expect to use. 

For example, Clearwire will give you 4G access at slightly lower speeds for $55 a month, with no limit on how much data you consume. So if you use less that 5 GB, Verizon Wireless is cheaper. But any overage on Verizon will cost you that extra 10 dollars per gigabyte. T-Mobile has a different approach. Their 4G data pricing is also about $50, but there are no overage charges. Instead, T-Mobile just throttles your speed after you pass your 5 GB. T-Mobile has a variety of other 4G plans depending on what you're doing with it and what kind of device you're using. 

So looking at the competition, it would appear that Verizon Wireless has a pricing plan that's competitive with the other carriers at the 5 gig level. At the 10 GB level, it's pretty expensive, especially when compared against Sprint/Clearwire. But it's faster than the Clear version of 4G, and as long as you regularly consume 10 GB of data every month, you'll avoid having your speeds throttled as you would with T-Mobile. But to make the Verizon Wireless 10 GB plan worth it, you have to regularly consume a lot of data while being careful not to go over that limit. 

Fortunately, Verizon Wireless makes it relatively easy to keep your data limits in view. The company will send out text messages as data is consumed, so when you get to 90 percent of your data usage for the month, you shouldn't be surprised. 

Getting the Pricing Data to Make Informed Decisions


 

So far, so good. But the next question is why Verizon Wireless has structured its data plan the way it has. I think there are a couple of reasons. The first is that the lessons of AT&T and the iPhone data usage aren't lost on Verizon. The company wants to make sure its 4G service is available to everyone. So making very heavy data use very expensive keeps a lid data consumption while also making sure the network is available to other users.  

This means that if you plan to regularly download movies to your laptop, those movies will start getting pretty expensive. But if you're just checking your e-mail or using Google Goggles, you'll be able to cruise along at $50 a month just fine and not worry about going over. 

I think the second reason is that Verizon Wireless, like the other carriers, wants to lock its 4G customers into Verizon's 4G. If you have their 4G and suddenly T-Mobile, for example, starts offering 4G at around 50 mps, you won't have to worry about a mass defection.  

There's also another question, and that's whether Verizon's 4G pricing will remain the same once 4G phones start showing up. Those 4G phones will have to have a voice plan along with a data plan, and that could mean that customers may be paying nearly $100 a month at the low end of the cost scale. That's a lot of money to pay for wireless service and it could be that Verizon will provide some sort of bundling deal that makes the whole thing more affordable. 

It's also likely that Verizon's 4G offering will start a price/performance war (that actually may have started already), in which the carriers will reduce their 4G prices and make a big deal out of relatively minor differences in speed. There will be some issues that Verizon Wireless will be unable to duck, such as the inability of their current USB 4G devices to roam from 3G to 4G without having to stop what you're doing and reload 4G. Those issues will go away with time as Verizon builds out its network, but in the interim, you can be sure you'll hear about it from everyone else. 

The bottom line is that Verizon Wireless has an expensive service, as has been the case with its voice and 3G services. However that hasn't stopped the company from being the top seller in the U.S. While it's possible that a customer can run up a whopping bill if they're not careful, avoiding this appears to be fairly easy. Whether that expensive service is worth it or not remains to the judgment of the customers, just as it is with current services. But the good news is that Verizon Wireless is being perfectly clear how the pricing works well in advance, so you have the information you need to make a decision. 

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