Verizon Hints at Following AT&T to End Unlimited Data Plans

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In the wake of AT&T pulling the plug on its unlimited data plans, it is more or less expected that Verizon will follow suit. Comments from Verizon execs suggest that businesses using Verizon wireless can look forward to tiered data plans in the near future, but with some caveats.

It doesn't have the iPhone, but Verizon has great smartphones, and better customer relations than AT&T.
A story from BusinessWeek quotes John Killian, CFO of Verizon commenting on wireless data plans, "We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate."

At face value, it sounds like Verizon is taking a page from AT&T's playbook and capping the data plans. The reality is--that may be true, but it has to be put into the greater context of what Killian was talking about.

There are two big caveats to the reports of Verizon ending unlimited data plans. First, Verizon has no intention of abruptly ending unlimited 3G data plans as AT&T has done (with the exception of the grandfathering that allows those who already have unlimited data plans to continue using them as long as they are never stopped or changed). The discussion around tiered data plans for Verizon focuses on how Verizon intends to package and sell data on the upcoming 4G network.

Second, unlike AT&T, Verizon has a progressive vision for data plans that sounds compelling. At an investor meeting earlier this year, Verizon Wireless CEO Lowell McAdam explained, "the model to me going forward is I expect that people will have realistically four or five or six devices that they have to connect to the network, and it may be as many as 20. And so I think you're much more into the mode of instead of a device and a price plan, you are into let me buy a bucket of megabytes and I will use them any way I want."

By contrast, AT&T killed unlimited data plans and has a much more "nickel-and-dime" approach to milking profit from the data plans. AT&T expects users to have separate data plans for each device, as well as paying for the privilege of tethering without any additional data allocation. As if that is not enough, customers who pay $150 for a 3G microcell to improve reception in areas where AT&T's 3G signal is lacking will be have both data usage and voice calls placed over the microcell counted against their data plan allocation.

Based on the stats provided by both AT&T and Verizon, the vast majority of users don't truly need "unlimited" data, and--depending on the price model--may actually benefit from the tiered pricing. However, comparing the plans laid out by AT&T with the vision outlined by Verizon, Verizon definitely wins the public relations battle.

To counter the backlash and foster better customer relations, AT&T should consider a similar universal data plan approach, and perhaps even adapt the concept of rollover minutes to data. Business customers will be much more accepting of a data plan that allows them to purchase a general data pool to be used across all connected devices, and that rolls over unused megabytes to the next month.

The bottom line is that Verizon is looking at a tiered model for data plans, but not immediately, and not for 3G data plans (at least not yet). More importantly, when Verizon does implement a tiered pricing model for data, it appears to have a much more progressive and customer-friendly approach that will incite kudos rather than complaints.

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