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Tiered mobile data plans accelerate: Verizon Wireless to follow AT&T's lead

Verizon Wireless is following AT&T's lead and cooking up tiered data plans. The all you can eat mobile data buffet is history.

This is a guest post from Larry Dignan of TechRepublic’s sister site ZDNet. You can follow Larry on his ZDNet blog Between the Lines, or subscribe to the RSS feed.

Verizon Wireless is following AT&T's lead and cooking up tiered data plans. So long, unlimited mobile data.

Details are sparse about Verizon Wireless' planning, but Bloomberg reports that the telecom carrier will go tiered. Bloomberg quotes Verizon CFO John Killian as saying: "We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate."

It's unclear whether Verizon Wireless will directly match AT&T's pricing model, which includes 2GB of data for $25 a month and $10 a month beyond for each $1GB over the cap. AT&T also has a lower $15 plan for 200MB of data usage a month.

Also: AT&T: Is it alone on data cap island?

AT&T's plan raised a bit of a ruckus, but a larger question was whether Verizon would follow. If Verizon Wireless stayed in the unlimited data camp it could tax its network, but also put AT&T in a competitive bind. Now that the two big wireless dogs are going to metered access other carriers will follow. They'd be stupid not to follow suit-unless you have plenty of capacity and need more customers (Clearwire).

We discussed the industry implications of following AT&T's data cap plan last week. In a nutshell, the industry is better off with tiered plans. Consumer behavior is likely to change. A few key points:

  • Apps will be judged based on efficiency and data usage;
  • Consumers are going to shun mobile video and streaming music services;
  • High-end data hog smartphones may look less appealing.

That final point is the real item to watch. While the tech savvy may pay up for data, the average user is either going to stay well below the cap and shun broadband-ish services or just get a dumber phone. My guess is folks will still get the fancy phones, but change behaviors. As Bernstein analyst Craig Moffett recently said consumers mobile video habits will change "Customers will pause before clicking on that link you just sent of the squirrel on water skis," he said.

Related: AT&T revamps data plan pricing, adds iPhone tethering
17 comments
bsherman_04
bsherman_04

I see cogent taking over and screwing up another market. Why does Cogent own the data market because they can easily undercut this type of crap. (though their routing can be horrible at times.) So any Cogent employees out there listening, maybe you should go into cellular as well. After all you do have one of the largest networks in the U.S., if not the world.

dmboshers
dmboshers

nothing short of a tragedy as far as I'm concerned. Hard to believe we are actually moving backwards. What's next, return to dial-up?

DJMorais
DJMorais

It was bound to happen. I agree with posters out there that suggest that these carriers do not care about their customers, they are just watching their bottom line and figure it's time to cash in. And that's OK with me; I lived without it before, I can do it again! More money for me to do other things with...

rocket ride
rocket ride

I still have my old, dumb flip-phone on Verizon. It's getting flaky. I _was_ seriously considering one of the new Androids to replace it. That ain't gonna happen now. I will be replacing it with another dumb phone. Screw 'em. I don't need that siphon in my wallet. Nothing about getting and sending data from my cell-phone is even close to essential to the way I live my life. I'd probably ditch Verizon for the lack of rollover minutes, but all the other providers' coverages suck in my area. (I live about 3/4 of the way out in the countryside.) -- rocketride

co_john
co_john

I bet the next thing will be a surcharge for the wireless hot spots where everyone will now be going to do their data heavy downloads and apps with their wireless capable phones.

robwaybro
robwaybro

I question how the industry is better off with tiered plans. This may be better for the carriers, but not the industry. This will put the brakes on a lot of development. Then you follow up with: "the average user is either going to stay well below the cap and shun broadband-ish services or just get a dumber phone." and "Customers will pause before clicking on that link..." No, I see this as another version of the 'bait and switch' tactic. Lure them in with unlimited, the stop offering unlimited plans. HUGE backward step in my opinion.

chris.smith
chris.smith

I agree... I think this is a step backward for the carriers. People want data, that's what a smart phone is for. Ask someone to go from a android phone or iPhone to a simple slide phone with no Internet. Not going to happen for most people. Let's face it, the carriers need to really invest in getting into the 4g spectrum so they can offer WiMax. Eventually everything will be wireless and the carriers are going to be what road runner and comcast are today. By the way, I got the whole bait and switch with my iPad... Bummer.

CharlieSpencer
CharlieSpencer

But do they want it enough to pay for it by the byte? How badly do they want to update that social page or upload the baby photos as opposed to waiting until they get home? How willing are people to continue their recently developed non-essential behaviors when it hits them in the wallet?

cnieves
cnieves

i will do my data stuff on free access points like mcdonalds, panera bread and starbucks. there are routers everywhere. who needs to use the data plan. it can be used only for emergencies. most of them are slow anyway, specially att is crap.

capeterson67
capeterson67

No company really cares about it's customers beyond the obvious: Find their financial tipping point and charge the maximum the market will bear Keep them from going to a competitor. For myself, as soon as my plan expires, I will be moving down to a much dummer phone. The data is a luxury anyway. I will try and keep basic email service but depending on how their new tiered plans are structured, I can answer client calls on the road with a modest flip phone if I have too. I like my Storm but I am already tired of getting gouged the extra fee no matter whether I have a lot of data use or not. I think the many people will move back to lower tech phones once the total additional cost becomes clear to them.

CharlieSpencer
CharlieSpencer

The unlimited service is not being cut off for those with existing contracts. Never expect a new service contract not to have changes from an existing one.

XnavyDK
XnavyDK

Contracts will not be able to change phones or services without changing to the new contracts and there's the lure ( "unlimited for a limited time?"), and the in the long term the switch. Look at it like a 2 year "teaser" rate? Your logic is undeniable, but it will still tweak the nip of folks who like what they had which is no longer available. We knew this was inevitable. Tiers because the infrastructure just cant handle the load. But the real question is are they going to vamp the infrastructure? The folks that consume that much data on a mobile device will need to get their face outta the screen because their rates will consume their entire paycheck paying for the infrastructure. I personally would like to have started out on a tiered plan. My GF doesn't use a 1/3 of her available usage, whereas I use it up almost to the limit on some months. I think the unlimited usage was short sighted and should have started out on a tiered plan. Hey Verizon< can I get some dang Rollover?

XnavyDK
XnavyDK

I'm still waiting for the check.

CharlieSpencer
CharlieSpencer

Sure, and the check's in the mail, and I don't know what that taste is in your mouth.

MichelliL
MichelliL

This is spot on. I know I've been getting more angry by the day as this news has broke. I use quite a bit of my data (not sure if I've yet broke 2GB, but definitely close every month.) Just listening to Pandora on my BlackBerry alone could push me over. Plus I've been using the MLB app, which allows me to listen to the radio broadcasts of games. I also have UberTwitter running constantly, e-mail, the occasional YouTube video, etc. I consume a lot of data. And why not? I was forced to accept a more expensive plan just for the "privilege" of owning a BlackBerry with Verizon. Now they want me to pay more, "or use less." Sure, just like higher cigarette taxes are meant to force people to quit smoking. {wink, wink, nudge nudge}

fishcad
fishcad

My 6-year-old Treo was giving up the ghost. I rarely used text messaging and had no need for a data plan so the old girl was doing everything I needed until the screen started dying. I wanted to keep the ability to sync my calendar and contacts with my computer so my only option was to go to a "smart phone." Sure, I use the data feature, but I would gladly give that up to have the same features I used on the Treo without having to pay for a data plan.

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