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Verizon Wireless, which is expected to begin offering an Apple iPhone by early 2011, will begin offering tiered pricing for its data plans beginning Oct. 28.
Initially offered as a holiday promotion, according to the Wall Street Journal, Verizon will offer customers the option of a $15 monthly plan for a limit of 150MB, or a $29.99 plan for unlimited data use. Citing “a person familiar with the plans,” the Journal reported that Verizon executives will consider how successful the offer is before deciding whether to extend it permanently.
In offering an unlimited plan, Verizon would set itself apart from rival AT&T, which in June ended its $30 all-you-can eat plan and replaced it with the option of $15 for 200MB or $25 for 2GB of data – a move that AT&T CEO Ralph de la Vega has said has been successful in signing up new customers who weren’t willing to pay the $30.
The whole of the wireless industry watched AT&T Wireless, the for-now exclusive provider of the Apple iPhone, struggle to support the voracious data use of its iPhone customers under its original unlimited data offer. Now, as smartphone use increases and 4G networks are beginning to go live, executives at each carrier are taking the example of AT&T into advisement as they decide how to proceed.
In a June interview with Businessweek, Verizon Chief Financial Officer John Killian said that the carrier was considering tiered pricing, given the explosive growth of data traffic. “We will probably need to change the design of our pricing where it will not be a totally unlimited, flat rate,” Killian said in the interview. “We control the decision.”
Sprint CEO Dan Hesse, at a Sprint conference, similarly told audiences that he wasn’t ruling out tiered pricing. “Tiered pricing is something we look at,” Hesse said.
Even T-Mobile recently announced that it will begin reducing data speeds for those “extreme data users” who consume more than 5GB of data per billing cycle. These users, T-Mobile officials explained in playing down the move, constitute “less than 1 percent” of its customer base.
How do consumers feel about transitioning from buffet-style to portions?
According to a third-quarter report from Devicescape, 78 percent of the WiFi users it polled said they would consider switching service providers if their current plan were capped. Nearly the same percentage said data capping would impact how much data they stream, and 61 percent said they wouldn’t pay for a premium price for unlimited data.
“Still,” states Devicescape, “a fair number of respondents (38.8 percent) indicated they would pay a premium price for unlimited data plans. Almost 60 percent of this group … would pay less than $25 per month, while 33.1 percent would pay up to $50.”
According to Engadget, Verizon customers who choose the $15 plan will be charged an overage of 10 cents per megabyte. There will reportedly also be $20, $35 and $50 tablet plans, with overages of $10 per gigabyte. Feature phone users, while using far less data than smartphone owners, will also be included, per Engadget, with an offer expected of $1.99 for “pay as you go,” $15 for 150MB or $29.99 for unlimited data use.
Verizon will announce 4G pricing closer to the launch of its LTE-based 4G network, and customers can keep their existing plan if they choose to Engadget reported, adding, “Thing is, the fact that Verizon is preserving its unlimited smartphone option is a big deal – it’ll be interesting to see if it twists AT&T’s arm hard enough to bring it back.”