Verizon: Unlimited $30 Data Plan for iPhone

NEW YORK--Verizon Wireless will keep its $30 unlimited data plan for the iPhone, Lowell McAdam, chief operating officer of Verizon, said today at the company's quarterly investor meeting.

The Wall Street Journal first reported McAdam's comments ahead of Verizon's quarterly earnings conference call this morning. And the company confirmed it here at an event for investors and analysts.

"I'm not going to shoot myself in the foot," he told the Journal. He said that not offering an unlimited plan would put up a barrier for customers who want to leave AT&T. In June, AT&T changed its data service offering and eliminated the unlimited data plan for new customers. Now new customers are required to buy one of two capped services: $25 for 2GB of data or $15 for 200MB of data per month.

While new customers at AT&T are not able to get an unlimited data plan for any smartphone, customers on contract with AT&T before June were grandfathered in to the plan.

Even though Verizon has talked about offering a usage-based tiered pricing service, changing the policy would likely prevent many existing and longtime AT&T iPhone users from switching to Verizon.

At its earnings conference today, executives said that the company will discontinue the $15 data plan for smartphones that offers 150MB per month.

The new Verizon CDMA iPhone will go on sale February 10. And it's expected to be a hot-selling item. Verizon executives did not provide exact projections for iPhone sales, but they say that analyst estimates of 11 million new subscribers for the iPhone is likely an accurate estimate.

Part of the reason that Verizon executives said it's difficult to provide more precise guidance on sales is because the company is unsure about demand for the device as well as supply from Apple and its component providers. Last year, the company experienced back orders on some Android smartphones because there were shortages of screens and basic components. That said, McAdam said he felt comfortable that the company would hit projections that analysts have predicted.

"We are giving you as much guidance as we can," said Verizon CEO Ivan Seidenberg, during a question and answer session at the conference. "There are lots of unknowns. We think we know how many people will switch from AT&T to us. But we don't know. We do believe our brand and network will drive a lot of people."

Seidenberg said that he believes the company will "probably do better than most people think" when it comes to iPhone sales.

As Seidenberg mentioned there is pent-up demand from existing AT&T iPhone customers for the iPhone on Verizon. These customers are likely to be people looking for better network quality. Verizon, which has had strong performance in terms of network quality, has been preparing for the additional capacity from the iPhone for the past year, executives said. McAdam said during his presentation that Verizon has been doubling 3G capacity for its network every year.

"The 3G network has been and will continue to be important," he said.

But Verizon executives also said that they expect to sell a large number of iPhones to the company's existing base of subscribers. At the end of the fourth quarter only about a quarter of Verizon's subscribers were using smartphones. McAdam said he expects that number to double to at least 50 percent by the end of 2011.

While Verizon will be adding large numbers of smartphone subscribers, who are expected to spend about double what typical feature-phone customers spend, Verizon will pay a price for adding these customers. The reason is simple: these devices are heavily subsidized. In fact, Fran Shammo, Verizon's CFO, pointed out that the addition of the iPhone and the subsidy that Verizon will pay to offer the device to new customers will cut into profits over the next year. Even though average revenue per user will grow substantially, earnings per share are only expected to grow in the 4 percent to 8 percent range, he said.

Still, Verizon expects to maintain profit margins in the 47 percent range despite the launch of the iPhone.

Verizon Wireless also plans to change a number of sales policies. It has already announced that it will ditch its "New Every Two" promotion where subscribers can get credit toward a new phone every two years. The company is also changing its return policy from 30 days to 14. And finally, the company will work with a third party to offer a new trade-in program that will allow consumers to turn in phones early and get credit toward a new phone.

Marguerite Reardon

Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.

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