Verizon To Bludgeon Data Hogs With Fees

Wireless network operators have yet to settle on the best policy for managing bandwidth hogs, but Verizon Wireless plans to move to tiered data plans this summer.
Wireless network operators have yet to settle on the best policy for managing bandwidth hogs. Some believe throttling speeds is the answer, others think hard limits and sliding data fees will work. Verizon Wireless, on the other hand, thinks hardcore financial penalties will convince data hogs to use their fair share of the network.

"The user that wants to use a lot [of data] will pay for it," Verizon Communications CFO Fran Shammo said Tuesday at the Barclays Capital Global Communications, Media and Technology conference.

Right now, Verizon offers a few different paths for mobile broadband. For example, I pay Verizon $50 per month for the right to use 5 GB of data on its 3G/4G networks. If I exceed 5 GB, I pay an extra $10 that month up to 5.99 GB. If I exceed 6 GB, I'll pay an extra $20 that month. My costs may be going up on based on my usage, but my service remains the same. I'll get the exact same speedy mobile broadband whether I spend my allotted $50 or an additional $100 in overage charges.

This is in stark contast to the new model announced by T-Mobile this week. It offers a number of tiered data plans that include a soft cap at the top. For example, if I have a 5-GB monthly plan and exceed it, T-Mobile will throttle my bandwidth down to 2G/EDGE speeds for the remainder of the billing cycle. My costs remain the same, but my service will be crummy the rest of the month.

The market has yet to shake out the perfect fit for these types of plans, which the carriers seem to change as often as Mother Nature changes the seasons. Each of these approaches has its pros and cons.

Shammo reminded attendees at the Barclay event that Verizon plans to introduce tiered data plans for its mobile broadband services starting at some point this summer. "As the market matures, pricing will mature," he said. "But right now we are focused on tiered pricing for the summer."

Verizon Wireless has not indicated how severe the overage charges will be once it moves fully to a tiered data offering. Rest assured, they will be higher than the $10-per-GB penalties levied now.

What's important for enterprise mobile broadband users to understand is exactly which type of penalty they may incur for using too much bandwidth in a given month. While it is great to have a steady budget each month, IT and management has to ask themselves just how effective mobile employees can be on the road when their Internet is locked down to 2G speeds.

Verizon indicated that it plans to introduce family data plans this summer, allowing several users on a family plan to pool the amount of mobile data used each month. This should help families avoid paying for more broadband than they need, while still making sure they have enough to go around.

If Verizon is going to offer a flexible option such as this to its consumer customers, surely it is thinking about a similar service for its business customers. It's worth asking about.