Verizon Wireless will pull the plug on its fading unlimited data plan, which got a reprieve for Apple's CDMA iPhone 4 when it became available last month. The end will come this summer, a top executive announced Tuesday.
The $29.99 flat rate is currently the only option for Verizon's consumer smartphone users after the company cut its $15 option for 250 megabytes of data after the holiday season. Feature-phone users may still choose a $10 option for 75 megabytes or a pay-as-you-go rate of $1.99 for each megabyte.
Verizon Chief Financial Officer Fran Shammo announced at the Morgan Stanley Technology, Media and Telecom conference in San Francisco that the $29.99 plan is "not a long-term solution" and will be phased out soon, according to Bloomberg News. The summer timing might coincide with the release of the fifth-generation iPhone.
While Shammo was talking specifically about the iPhone, Verizon spokesperson Brenda Raney told us, "We don't have any plans specific to any device. Our plans cross all devices."
Rivals Sprint Nextel and T-Mobile still offer unlimited plans, while AT&T, the second-largest U.S. carrier by subscribers, was the first to end unlimited data last year.
Consumer surveys by J.D. Power and Associates show that 34 percent of all customers have unlimited data plans. "Those plans have been around for quite a while and are a good deal, especially among heavy users," said Power wireless analyst Kirk Parsons, who believes a large share of Verizon users exceeded the previous 250-megabyte limit. "I suspect that for the heavy users, the lowest tiered data plan will not be enough and they would have to go up to the price scale."
Another analyst, William Ho of Current Analysis, said a low-level data plan would be attractive to new smartphone adopters.
'Toe in the Water'
"Offering a lower entry data plan provides a toe in the water for those people who are just getting into data and attracted by the smartphone craze," Ho said. "A lower price point addresses their price sensitivity."
"For carriers like Verizon Wireless and AT&T, having a low entry data plan allows users to migrate into data usage, and, for the most part when users consume data, they're hooked," he added. "Another opportunity is up-selling them when they view the extra money is worth it for the utility of data use."
Verizon executives have been saying for months that tiered pricing will be necessary as more customers use smartphones, to discourage so-called data hogs from slowing the network.
Ho said that's increasingly important for the carrier as more smartphones, including Verizon's iPhone 4, have the ability to tether other devices via Wi-Fi. "Tiered data plans address data-hogging for sure, especially as smartphones will have mobile hot-spot capability built in," he said.
Posted: 2011-03-01 @ 11:04pm PT