Verizon's Revamp in Wireless Pricing
Rajesh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Verizon Wireless (NYSE: VZ), the largest wireless company in the US, is coming out with the biggest revamp in phone plan pricing in years. The company is phasing out almost all its phone plans, replacing them with new Share Everything service plans that include unlimited calling minutes and texting messages along with a monthly data allowance that can be used on multiple devices. The idea is to basically enable families and other subscribers to share monthly data allowance in as many as 10 devices, which could include non-phone devices such as their tablets and PCs.
The plans will be available June 28. And for sure, Verizon will soon be facing competition from rival AT&T (NYSE: T), which won’t let Verizon wander alone. AT&T has already expressed its plan of introducing the shared data services soon. The other two national carriers, Sprint (NYSE: S) and T-Mobile USA, will eventually join the league.
A necessary move…
Verizon couldn’t wait long to come out with something new. This move was predictable especially as the industry posted lower number of phones on the lucrative contract-based plans. Wireless providers are therefore coming out with new plans with increased and relatively economical data usage to attract customers and keep the service revenue growing.
Let’s check out the plan in details
Families these days have a number of smartphones and a whole lot of plan options, which amounts to confusion. Verizon’s Share Everything makes things much easier. As per this plan, unlimited calling and texting can be shared by the family, and the only variable factor is the data package, which ranges from 1 gigabyte to 10 gigabytes.
When it comes to talking and texting, subscribers definitely need to track their combined data consumption. Verizon allows its users to adjust their data package from month to month. However, the wireless provider will charge $15 per gigabyte in case the subscriber crosses the monthly allotment.
The base data allowance starts at $50 for one gigabyte, $60 for two gigabytes, after which the company will charge an extra $10 for each additional two gigabytes.
The plan can be shared with up to 10 devices. Each device added to the plan would call a tariff, which is called the access fee. For instance, the monthly access fee of a smartphone would be $40, for non-smartphone it would be $30, laptops, USBs or ‘mobile hotspot’ devices would cost $20 and tablets would cost $10 a month.
The old vs. the new
Currently, a nationwide single-line plan with one smartphone having unlimited calling and texting with two gigabytes costs $120 compared to Share Everything’s same plan for $100. Two smartphones with unlimited talk time, text and four gigabytes data allowance takes $210 a month from the pockets compared to $150 for the Share Everything plan. In fact the cost can come down to $130 per month if one gigabyte data package suffice.
How does it benefit Verizon?
From Verizon’s viewpoint, offering unlimited schemes will not only result in efficient utilization of its network, but will simultaneously increase its service revenue. Revenues of the company will be driven by the increased connected devices and higher data usage.
Not only is this beneficial for the company, but it will be extremely cost-effective for subscribers who can connect more devices to the plan. The plan is extremely attractive for heavy phone users. Apart from this it will entice others too, as unlimited calling and texting plans give peace of mind to most people.
Final thoughts
Data consumption levels are rising like never before and service providers are increasing their prices while throttling speed beyond a particular consumption level. Amidst this, Verizon’s offer stands out. The company’s fee per gigabyte of data might look expensive but sharing the data is its unique selling point. Also one should bear in mind that it includes unlimited calls and texts as well.
The plan will undoubtedly appeal to heavy data users, ones who use multiple devices and families with huge voice and data usage. The leader indeed acted like a leader in revamping the wireless pricing. Others will follow.
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