Verizon launches LTE into a price war
Expected to hold off on tiered tariffs until it has handsets, undercuts 3G but not Clearwire
Published: 6 December, 2010
READ MORE: US | Verizon Wireless | LTE
The US duly got its second 4G service when Verizon went live yesterday, and already there are signs of a price war. Behind glitzy advertising messages and new apps, the carrier knows that pricing and a reliable user experience win the day in the initial stages, and the presence of Clearwire means it cannot command too high a premium for being first to LTE.
To the surprise of many, it launched with flat rate price deals, rather than using LTE to introduce tiered tariffs, and most observers expect it to stick with that approach at least until it has a wider range of devices, including handsets, around mid-2011.
Even more surprisingly, it undercut its own 3G data plans. Initially, it will offer download peak speeds of 12Mbps (upload 5Mbps) with a USB dongle from LG, priced at $99.99 with two-year contract of $50 per month (capped at 5Gb). That is $10 a month less than Verizon's 3G dongle plans and the same as tariffs for netbooks with embedded 3G.
The fairly aggressive pricing is designed to thrown down the gauntlet to Sprint/Clearwire, set a difficult bar for AT&T, and encourage users to move from the older network to the more efficient new one. But the pricing is not as aggressive as Clearwire's, nor will Verizon catch up as quickly with Clearwire in capacity as it will in coverage, because it has started in sparse 700MHz. And high capacity brings greater flexibility to continue to support unlimited data or other tariff options.
Verizon's offers are capped not unlimited (with $10 per Gb per month overage fees). They are $50 for 5Gb and $80 for 10Gb, compared to Clearwire's $45 with no cap. That would cost Clear's average customer, who reportedly consumes 7Gb a month, $70 ($50 plus $20 overage).
Verizon also said it would offer no-contract LTE options in addition to its postpaid pricing. Spokesperson Brenda Raney said the no-contract deal will cost the same as its postpaid offering but with higher upfront charges for devices - $250 for the first one, the LG VL600 dongle, rather than $99.99 with contract, for instance.
The other US LTE operator, MetroPCS, has a different approach, focused on making voice and conventional data plans more efficient, and it is only in six markets. It charges $55 per month without a contract for unlimited voice, texting and LTE data and already has a handset, the Samsung Craft, which costs $299.
Clearwire has a wider choice of devices at the moment, including those of its MVNOs, claiming 45 embedded laptops and netbooks, four dongles, two smartphones and three personal hotspots, plus some innovative pricing options (Clear's flexible short term data deals, a $25 a month attached to a hotspot, specifically marketed as improving the performance of the Wi-Fi iPad, iPhone or iPod Touch). Verizon will soon introduce a second dongle, and in the first quarter of next year a netbook, a tablet and other products are expected, but no handsets until Q3.
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