Verizon and AT&T spark new pricing war, in mobile data
Published: 18 January, 2010
READ MORE: US | AT&T | Verizon | Billing
The days of super-cheap mobile data plans are numbered, and Verizon Wireless and AT&T are locked in a new price war. Unlike last year's tariff battle among US carriers, which focused on the prepaid low end, this time is about the heavy data users. This means that the top two carriers are leading the charge, rather than their low cost rivals, as their current networks creak under the strain of mobile media, and they look for better ROI from their upgraded systems.
Verizon, on the cusp of its first LTE roll-outs, has shaken up its prepaid and postpaid price structures to get more revenue from exploding data usage. AT&T quickly followed suit. Verizon's moves are designed to improve the situation where rising data levels, on flat rate contracts, deliver little added value to the carrier. The sop to consumers is that they will be simplified in structure and provide lower unlimited price points for more casual users.
"To me, the future here is about data, and this is about data in my view," said Verizon CEO Lowell McAdam on an investor call. "It's the smartphone portfolio teamed together with very simple data pricing." He added that this was mainly geared to attracting high value customers, "as an on-ramp to LTE".
Under the new monthly plans, the unlimited price point falls from $99 to $69.99 for unlimited calling or $89.99 for unlimited talk and text. Nationwide Family Share Plans will now have unlimited options for $199.99 for voice, or $149.99 per month for voice and text on just two lines.
Verizon has also sought to simplify its confusing device structure, splitting all but the most basic handsets into three categories - full smartphones, like the BlackBerry and Droid; '3G mediaphones', typically with an HTML browser and the Brew software platform; and 'simple featurephones'. Each category comes with its own distinct data plan, designed to ensure that users of smartphones, which drive high volumes of data consumption, generate greater value for Verizon; while owners of midrange handsets are encouraged, with new entry points, to increase their data usage and possibly upgrade to higher end gadgets.
So, the $9.99 25Mb monthly data tariff is now extended to all 3G 'mediaphones', axing the $19.99 option. Customer on featurephones will continue to pay $1.99 per Mb or go for a $9.99 or $29.99 data contract. Consumer data packages for 3G smartphones, including BlackBerry, Windows Mobile and Android devices, will remain at $29.99 per month, but this will be the minimum rate required for using data on a smartphone.
Also in the service of streamlining, as well as lower costs, Verizon plans to reduce the number of devices offered by its stores from 80 to 50, and in future, this number will fall further. This will intensify the competition among handset makers for slots at Verizon, but should generate better volumes and value for the successes. McAdam plans to add 20 new smartphones "down the road", offering Droid-type capabilities. These will run a mixture of BlackBerry, Android and, reportedly, iPhone and LiMO systems.
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