Verizon to kill grandfathered unlimited data plans upon renewal (Update)

verizon-4g-lte-expensiveWe knew this day would come. Verizon and AT&T stopped selling unlimited data plans more than a year ago, but many early smartphone adopters (like myself) have been clinging to their $30 per month unlimited plans ever since. Scared to annoy users too much, neither Verizon nor AT&T have forced users to upgrade to tiered, limited data plans. The hesitation is about to end. Speaking at a JP Morgan conference, Verizon CFO Fran Shammo said the wireless carrier plans to begin forcing users to switch plans as soon as they renew their contracts. But instead of the current tiered plans, Verizon will move customers to new “data share” plans.

What is a shared data plan?

Well, we don’t yet know exactly what Verizon considers a shared data plan to be, but according to FierceWireless, Shammo claims that they will allow people to connect new devices to Verizon service without being charged for an extra plan. Currently, you must pay $30 per device to get a data connection for it, which adds up quickly. 

“If I can add as many devices as I want, that is more efficient from a family perspective and a small business perspective,” said Shammo.

We don’t yet know if shared data plans will cost more, only be available to those with family plans, or any other strict details, like how much data you will get and what it will cost. Still, assuming Verizon decides to keep its current price of $30 for 2GB of data, it takes the sting out of switching from an unlimited plan considerably since the new plan will be more flexible. In the spirit of being fair, we would hope that Verizon would begin allowing users to create wireless hotspots and tether their phones to share Internet for free as well, instead of charging an extra $20 for the privilege. 

How will Verizon really force users to upgrade?

verizon lte pricing to factor in transfer speeds cfo francis shammo  nov 2010Shammo seems to indicate that most of Verizon’s unlimited data plan users are still on 3G phones and are coming up for renewal. When the new plans are launched in “mid-summer,” Verizon will act like upgrading to 4G LTE requires a change of service. This is a predictable tactic, but he doesn’t address how Verizon will spin the forced plan switch to those who still have unlimited data plans and 4G LTE service already (Verizon has had 4G LTE available in many areas for almost a year). 

We assume that AT&T will somehow follow suit. Currently, the carrier has been using a hotbox technique to sweat its users out of their unlimited plans (and some users have fought back). Unlimited users who use a lot of data have experienced their speeds reduced significantly for the remainder of billing periods, having exceeded some unknown and continually shifting unlimited data…limit. We expect AT&T might use its 4G LTE network and shared data plans to entice users to make the switch.

In a best-case scenario, both AT&T and Verizon will not raise prices and offer more data on these shared data plans, making those with unlimited plans want to switch over. Of course, history seems to favor the idea that prices will rise again and somehow new, stranger limits will present themselves. 

(Article originally published 5/16/2012)

Update 5/18/2012: Verizon has emailed the New York Times to clarify exactly how it plans to push users to new plans. Like we thought, those who choose to sign a new two-year contract and get a new phone at a reduced price will have to sign up for a new shared data plan. However, it appears that if you decide to buy your new handset(s) at full retail price ($400-$800), you can keep your plan. Of course, if you’re paying full price for your phone, it would be dumb to lock yourself into a two-year contract at all.

Here’s the full text of Verizon’s email:

    • Customers will not be automatically moved to new shared data plans. If a 3G or 4G smartphone customer is on an unlimited plan now and they do not want to change their plan, they will not have to do so.
    • When we introduce our new shared data plans, Unlimited Data will no longer be available to customers when purchasing handsets at discounted pricing.
    • Customers who purchase phones at full retail price and are on an unlimited smartphone data plan will be able to keep that plan.
    • The same pricing and policies will be applied to all 3G and 4GLTE smartphones.