Somewhere, a bandwidth fairy just died. After a month of luring in new iPhone customers by touting its unlimited data plans, Verizon announced today that it too will move to a tiered, capped data structure sometime this summer, eliminating its $30-per-month, all-you-can-eat plan. I’d love to be optimistic, but it’s a sad fact that when mobile carriers screw with pricing, it never ends well for the rest of us.
AT&T started the fire
Sadly, Verizon is following AT&T’s lead on this one. AT&T is the worst at creating confusing pricing structures to get customers to pay more for less. After three years of “unlimited” (5GB) plans, the carrier eliminated the option last July and established a horrid tiered structure in its place. Instead of paying $30 for 5GB of “unlimited” data, the carrier began offering two plans: 200MB (.2GB) of data for $15 or 2GB of data for $25.
Aside from the obvious lack of pricing coherence, AT&T’s tiered plans are intelligently designed to screw over users by offering too little and encouraging overages. Here’s the kind of thing we can look forward to on Verizon.
- DataPlus 200MB plan: AT&T wins big time when users are tricked into choosing its 200MB plan. Those who opt for the “cheap” $15 DataPlus plan either don’t use any data at all, essentially giving AT&T $15 for free, or find that 200MB isn’t a usable amount of data. And they’re right; it’s not a fair or usable amount of data. Browsing the Web a few times and downloading a podcast can eat up your entire month’s supply of bandwidth. And if you use it up, AT&T makes bank, charging you an additional $15 for 200MB more data. In essence, instead of offering 5GB for $30, AT&T can get away with charging users $30 a month for 400MB of data. It’s a clever scam.a
- DataPro 2GB plan: This $25 plan offers just enough data to satisfy some users needs, but those who regularly use their phone will often be in danger of breaching the 2GB cap. If you go over 2GB, the carrier charges you $10 for an additional 1GB of data, meaning many regular data users will end up paying $35 a month for data.
- DataPro 4GB Tethering plan: This $45 plan is AT&T’s latest sneaky way to overcharge users. If users want the ability to tether their smartphone to a laptop, they have to dole out $20 extra for a tethering plan, which also gives them an additional 2GB of data. If you go over the limit, another $10 for 1 extra GB of data is added. Why can’t DataPro 2GB plan holders use their 2GB on a laptop via tethering? AT&T has no reason.
T-Mobile has adapted AT&T’s $15-for-200MB plan as well. These are only a few exacmples of how carriers overcharge for plans. Users are greatly overcharged for texting (which, really, is just data), talk, and almost every other service associated with mobile phones. Carriers make a living by nickel-and-diming customers.
While we’re guessing that current unlimited data plans will be grandfathered in, the many millions who have recently joined Verizon to buy the iPhone 4 may be feeling a bit betrayed. The carrier strongly emphasized its unlimited data plans before and during the device’s launch, going so far as to offer iPhone-specific unlimited data plans. Now, less than a month later, Verizon has already pulled the rug out.
Verizon’s pricey plans
We don’t yet know how Verizon plans to tier its service, but if its current 4G prices are any indication, data will get more expensive moving forward (learn about 4G here). The carrier is currently charging $50 per month for 5GB of data and $80 for 10GB on its newly-launched high speed LTE 4G network. (It should be noted that no 4G phones have launched yet; this amount is for 4G mobile broadband access via USB modem only.) Unfortunately, a user can potentially eat up 5GB of data much quicker than on 3G, according to some tests. Hopefully Verizon will adjust its data allotments when 4G devices are launched.
At its press conference today, CFO, Fran Shammo said that the imminent launch of the HTC ThunderBolt will give everyone an idea of what to expect from Verizon going forward. ”We have a very big opportunity at Verizon Wireless because 67 percent of our customers are either feature phones or multimedia phones,” which have optional data plans at around $10 per month, said Shammo. “We see the potential of our customer base spending in that $30 to $50 range.”
Late last year, Shammo also indicated 4G customers may have an option between service plans that offer higher data caps at lower bandwidths, or lower data caps at high bandwidth. The carrier hasn’t mentioned these plans since, but may still be considering the idea.
So, what now?
Well, now we get to wait. Like all carriers, Verizon is concocting the best way to make the most money from mandatory data subscriptions. Our only hope that the carrier’s marketing department decides that being honest, upfront, and flexible about data is the way to go. Verizon could still take a step forward and offer plans that let families pool data plans together or use services like tethering without an extra fee. These tiered plans could make data more affordable for many users and end up being a very positive change for Verizon. Sadly, it’s just not very likely.