Verizon Price Changes Leave Shared Data Plans Up In The Air

Adam Dickter,

When Verizon Wireless confirmed its new tiered data pricing Wednesday, beginning to phase out its $30 flat-rate for smartphones, there was no word about what may be the most eagerly awaited development for families that use smartphones, or would like to: Shared data.

Verizon Communications CFO Fran Shammo said in May at the Reuters' Global Technology Summit that its subsidiary, Verizon Wireless viewed eventual shared data in much the same way it did family plans that share minutes for voice calls that began with "individual minutes for individual users."

"I think it's safe to assume that at some point you are going to have mega-plans and people are going to share that mega-plan based on the number of devices within their family," said Shammo. "That's just a logical progression."

Not Yet

But that progression, logical as it may be, seems to be a slow one.

"We are still considering shared data plans as an option but we have nothing to announce in respect to those plans being available to customers," Verizon Wireless spokesman Brenda Raney told us on Wednesday.

While no U.S. carrier is currently offering shared data, wireless analyst Kirk Parsons of J.D. Power expects such plans to appear next year.

"It's a very big deal and would increase the usage of data/smartphone incidence," said Parsons. He said that when shared voice plans were introduced, "Those plan types took off and increased the overall household wireless incidence."

Family plans, like unlimited messaging plans, benefit carriers by stimulating usage and helping to bring a return on infrastructure investment, adds William Ho of Current Analysis.

"Shared smartphone or feature phone adoption allows customers to get their toes into the water without committing to individual data plans that lock each line in for the typical two years," said Ho. "Businesses already have 'pooled' voice and data plans so the concept isn't foreign to the service providers out there."

While a shared plan may undercut more lucrative plans, "the upside is better, in having a sticky product that increases revenue and decreases customer churn."

Verizon this week announced that monthly smartphone data plans after July 7 will cost $30 for two gigabytes of data; $50 for five GB or $80 for 10 GB, with $10 per GB above the limit of each plan. Feature phone users will continue to have a $10 plan for 75 megabytes of data.

Current smartphone customers will be allowed to continue their unlimited plan "even if they sign a new contract and purchase a new smartphone," Raney told us. She declined, however, to comment on the long-term future of grandfathered data plans.

Most Use Megabytes, Not Gigabytes

Research by Nielsen released last month suggests that a majority of smartphone users would be overpaying for all three plans. A study of 65,000 phone bills found that, even with an 89 percent rise in data use, the average was 435 MB. The busiest data surfers, averaging 4.6 GB, amounted to just 1 percent, which means it would be quite the rare smartphone user who would consume 10 GB to justify the $80 plan.

Verizon's new price tier presents an opportunity for differentiation to Sprint Nextel as the only one of four major carriers to still offer unlimited data.

"[Sprint has] been marketing the fact that they still offer unlimited data plans," said Parsons. "It could impact recruitment of new customers thinking about switching to Sprint when Verizon Wireless is in the consideration set."

In addition to phasing out unlimited data, Verizon is also doing away with the promotional free unlimited wi-fi tethering to its LTE phones. Adding this option after July 7th will cost $20 for two gigabytes of data, while earlier adopters may pay $30 for unlimited access.

"Verizon Wireless is streamlining data plans and creating usage based options for customers that, regardless of the device, allow customers to select the plan that best matches their use," said Raney. "Our new usage-based data pricing model will offer customers more options for smartphones and updated options for basic phones, tablets and netbooks. There will be no change to existing data plans for standalone Mobile Hotspots (MiFi or 4G Mobile Hotspot) or USB modems."