Verizon Hint to Customers: Get Ready to Pay More

CNET

Verizon, the biggest U.S. mobile carrier, is likely going to dump its unlimited data plan in favor of tiered pricing. In doing so, the company would be following rival AT&T, more closely aligning costs with consumer data usage.

CNET

In an interview with Bloomberg News, John Killian, Verizon's chief financial officer, said the company will "probably need to change the design of our pricing where it will not be totally unlimited, flat rate."

Still unclear is when the new plan goes into effect but Killian and his cohorts at Verizon obviously believe they can sell customers on buying in: he says that Verizon's 4G network will provide 10 times faster data rates than older networks. A Wall Street analyst quoted by Bloomberg had it right: the more bandwidth made available, the faster it's going to get consumed.

"From Verizon's perspective, the last thing you want is for another generation of consumers to be conditioned to the idea that data is always going to be uncapped," said the analyst, Craig Moffett, analyst at Sanford C. Bernstein & Co. in New York.

AT&T last week did away with its unlimited data plan. In its stead, a two-tiered data pricing schedule. But like AT&T, Verizon will now have to rebuff likely consumer complaints about making it more expensive for people to use mobile applications. Killian doesn't expect consumer blowback, in fact, he expects smartphone users eventually will make up 80% of Verizon's customers, up from the current 17 percent.

If you want a benchmark of comparison, customers who use AT&T's DataPlus planl now pay $15 a month for 200 megabytes of data and $15 for each additional 200MB over their quota. They pay $25 under the DataPro plan, which entitles them to 2 gigabytes of data and an additional $10 for each extra 1GB. The other takeaway: Verizon customers who use smartphones like the Droid are gobbling up data - between 600 to 800 megabytes each month, according to Killian. That's a potentially bullish harbinger for the myriad companies which offer services for mobile users.
  • Charles Cooper On Twitter»

    Charles Cooper is an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie.

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