As expected, Verizon Wireless will move data customers over to a "family share" plan that offers unlimited voice. Many customers will pay more, but the new plan will encourage the adoption of multiple devices such as iPads that use mobile data plans.
In a move seen as industry changing--if not a surprise--Verizon Wireless subscribers soon will be able to use wireless services on up to 10 devices under a new plan the carrier announced Tuesday. The Share Everything Plan includes unlimited voice minutes, unlimited text, video, and picture messaging, and a single data allowance starting at 1GB for $50 a month, up to 10GB for $100. The plan, which will roll out beginning June 28, also will include mobile hotspot service on all the devices.
New and existing customers are eligible to take advantage of the plan with no additional cost or contract extension requirements, Verizon Wireless said. Customers also have the option of keeping their existing plans.
"This is obviously a huge shift in the industry overall," said Weston Henderek, principal analyst for wireless services at Current Analysis. He added that "Verizon is essentially commoditizing voice and messaging by saying you have to get... unlimited voice and messaging."
Although the new plan will benefit some--mainly families with several devices--Henderek said people who don't need a lot of minutes or use third-party messaging services "will be severely impacted by this."
Carriers have been attacked for charging $20 per month for unlimited messaging when there are lots of free messaging apps, he said, but now Verizon is bundling that with voice and spinning the plan to say customers are getting extra value. "So they're trying to solidify that messaging component and unlimited voice as a baseline bucket to get people to spend an absolute minimum with them when they commit to buying a smartphone," he said.
After an analyst call with Verizon Wireless, Henderek clarified that "...all new postpaid Verizon Wireless customers who want a smartphone will need to buy the new plan. This means that they will be forced to take unlimited voice and unlimited messaging even if they do not need that many minutes." The lack of any option for new customers to buy a plan that has a small number of voice minutes and no messaging "...will have huge impact across the board on a wide range of customers."
Telling customers they will have unlimited voice is a way for Verizon to "justify a higher price point because they're saying you can make as many calls as you want," he added. "By having that as the floor, they start you at a price point that's maybe above what the low-end or mid-range user would have thought of paying in the past."
However, the industry is heading in this direction to bring in higher average revenue per user (ARPU), Henderek said. Choosing a plan is becoming more focused on data usage--not voice and messaging--which he called "more simplified and data specific."
The underlying value proposition of the new scheme is getting to share data, and make more effective use of what you're buying, as opposed to having to buy separate data plans for every device a customer owns, Henderek noted. "Now you can buy a bucket of data on your device and ... you can have your husband on it, your kids on it, whatever--and you're all sharing from the same data pool." It will also eliminate the pay penalty when a customer goes over his allotted amount of data, he said.
"Under the [current] structure... you each have 2GB of data and when you go over you pay a penalty," he said. "Under the new structure all that gets combined and instead of each having two gigs, you have a pool of six. In that way you're making more efficient use of the data you have and that's the best aspect of this new structure."
A lot of people will like the flexibility of knowing there is a framework for using their "data bucket" on any device they want, he said. So the winners will be families with shared accounts who currently use a lot of data and spend a lot of money, Henderek said. "People who use a decent amount of voice and data will [spend] roughly the same and people who buy lower-end, basic 450 minutes plans with the lowest end data plan and no messaging--those are likely the people who will likely end up paying more."
Although there will "definitely be some uproar" from the news, "eventually, people will swallow it," he said. However, the real surprise is that this didn't happen sooner, because the notion of sharing data with different devices makes sense, he said.
"We're in a world where there are so many new categories of devices that need connectivity you want to do what you can to encourage connectivity," he said. The previous plan structure of needing separate data plans was inhibiting growth in the market, because people didn't want to take on different plans for each device. The new plan will be effective from that perspective, said Henderek.
Another advantage of the new plan, according to Henderek, is that "... for $4.99 you can add usage controls that let you assign how much data you want each of your lines to have. So if you have 4GB of total data, you could limit one of your kids' lines to only 500MB for example. This is more convenient."
Carriers' legacy rate plans have been very voice centric and made up the bulk of a bill, with data messaging tacked on, and now that's been completely flipped, he said. Carriers have been playing it "safe and conservative" on making a change for a while, he added. "It took a long time for carriers to phase in this new pricing reality where data is priority" because there's a psychological component; customers have been used to paying for voice, he said.
But now, "People needing data is becoming such an intertwined part of our lives; people see the value of a fast Internet connection on the road and the ability to update Facebook, so there's no longer the fear" customers will balk at paying more for data, he said.
As for the other carriers, Sprint to a certain extent already does something similar with its unlimited data plan, Henderek said, and will most likely make tweaks to that. "AT&T generally has moved in lock step with Verizon on most things, so once this launches they will be out of step. The question is, will they offer this model or some form of it or leave some flexibility to let people choose" their smartphone plan, he said. "They're definitely going to respond and move in this direction," since all of the carriers have consistently said they're going to implement shared data relatively soon. "So this won't be just Verizon moving into this new pricing scheme. It will eventually be a widespread thing in the market."
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