Can Verizon Gain Traction With New Data Plans?
Bobby is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Verizon (NYSE: VZ) is all set to introduce its new data sharing plans later this month (June 28th), a situation that has sparked a lot of interest.
The new data plans in question could be good news for families that have a number of devices that require a lot of data. The new data sharing plans allow you to split the data that you purchase between numerous devices, thereby putting it to better use. You do not have to buy data for each device, increasing your chances of not buying more than you actually use in a month. However, these changes also come with steep hikes in data fees overall. Consumers will have to weigh the pros and cons of the upcoming packages.
The basics of the new packages are as follows: you can have up to 10 devices using the same data account. These devices can represent a mix of different technology. In addition you will have access to unlimited minutes and texting. The charges for these services will be directly correlated with how much data each of the devices you have connected to the account consume. Charges may get steep when you consider that you will have to still pay a monthly fee every month foreach of the devices that you have connected to the account, with the actual amount you pay depending on the exact device.
The main problem that customers may have is that prices have gone up more or less across the board. However, there are a number of perks and benefits that come with the new plans that make the decision about whether or not to switch to them considerably harder to make. Essentially the new plans will only work for families that have a high degree of data usage already. Customers are not required to switch to the new plans, but they are encouraged to do so. A lot of thought has to go in to deciding whether it is worth it or not.
Let's talk a little bit about why Verizon has made these significant pricing changes. The main strategy seems to be to increase revenue and to maintain older business lines. I believe that these new plans will boost revenue. However, I think that investors need to be patient while waiting to see the return. Because it is so difficult to calculate on an individual basis if the new pans are better than the old ones, people may be disinclined to automatically move from one to the other. In some specific cases, it is blatantly obvious that the old plans are better. I think that it will be a while before the new plans take-off in terms of popularity, but when they do it will be a major step forward for the tech stock.
Verizon has expressed interest in selling its 700 MHz Lower B Block spectrum radio waves, provided it gets the appropriate approval to purchase an alternative spectrum from a group of cable companies. One company that has expressed interest in purchasing Verizon's spectrum is AT&T (NYSE: T). The B Block Spectrum "pairs perfectly" with AT&T's spectrum and consequently the tech company could have it working in about 60 days. AT&T is not interested in the 700 MHz Lower A Block that Verizon is also selling. AT&T believes that spectrum holders should make more effective use of their spectrums, and it plans to lead by example in this regard.
Competitor Frontier Communications (NASDAQ: FTR) spoke recently about continuing its attempts to expand Internet access and other telecommunications services in the state of West Virginia. It seems to me that Frontier Communications is doing well with the property that it acquired from Verizon in 2010. By focusing on this area of West Virginia's infrastructure, Frontier Communications could make a significant difference to the economy in the state. At present, West Virginia is one of the "least wired" states, but this makes it a great state for a company like Frontier Communications to invest in as there is a lot of room for growth.
Alcatel-Lucent (NYSE: ALU) just can't seem to achieve the turnaround strategy that it promised its investors years ago. The process of change is taking so much longer than the initial estimate, that investors are starting to express their extreme disappointment in the company. At a recent shareholder meeting the company's investors put additional pressure on the company's management structure to get things back into gear. We really should have started seeing the benefits of the streamlining processes by now, but the company continues to spend without promising return. The French company faces more than just simple losses if it loses the confidences of its investors.
CenturyLink (NYSE: CTL) is making headway in the cloud computing arena. Recently its subsidiary, Savvis, announced that Savvis Symphony Virtual Private Data Center (VPDC) cloud solutions will now be available to Canadian clients. This subsidiary marks CenturyLink as a global leader in terms of cloud computing. This is exactly what we need to be on the lookout for in tech stocks at present, as this is by far the best strategy for moving forward to the next era of computing. Subsidiary companies like Savvis are what keep CenturyLink well ahead of the game.
Verizon's attempts to increase revenue, while at the same time protecting its older business lines, is a fairly good one in my opinion, at least as far as the well-being of its stockholders are concerned. However, I also feel that I would like to hear more about technological innovations from the company. Is Verizon doing enough to stay in this fast paced game? I'm not sure about this, but I do feel that investors need to watch the stock closely to see where it is going.
BobbyFisher has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
