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Data is cheaper to transmit, so why is Verizon more expensive?

Data is cheaper to transmit, so why is Verizon more expensive?
To be fair, this isn't an issue specifically with Verizon, but Verizon does have the easiest numbers to parse right now. According to some research done by The New York Times' Brian X. Chen, the trouble starts with the feature that we had been hoping for since the tablet boom started a couple years ago: shared data plans. Those plans make it so while data is now cheaper for carriers to transmit, carriers like Verizon are also able to charge more for that data.

The info comes based on the quarterly earnings report from Verizon, which showed that the carrier's average monthly revenue per wireless account grew 6.6%. The reason for this bump seems to be in that more subscribers are opting for Verizon's Share Everything plans, which allow families or users with multiple mobile devices to have a shared data plan. As of Q4 2012, 23% of all Verizon Wireless subscribers had opted for one of these plans. 

The thing is that shared data plans actually come out to be more expensive, or at least the profit margins are higher for carriers, because LTE is more efficient than 3G. Verizon CFO Francis J. Shammo made this explicitly clear during the earnings call, saying:
As more customers choose 4G LTE smartphones and devices, we expect the continued migration of data traffic from 3G to our lower-cost 4G LTE network will drive further improvements in operating and capital efficiency in 2013 and beyond.

So, the more people use LTE, the more Verizon (and other carriers) will benefit, because carriers can charge a premium for the speed, even though the data is cheaper for them to transmit. Add in overage charges, or tiered data plans, because faster speeds mean doing more data-intensive tasks, which uses more data, and carriers get to charge us even more. 

It all comes down to marketing and understanding. Carriers will cry all day about the costs of building the faster networks, and how hard it is to keep up with the bandwidth demands. And, when consumers look at the cost of a plan, we tend to look only at the speed of the connection and how much data we get. The trouble is that those things that we're primed to look for don't matter on the carrier side. LTE is designed to be able to handle huge amounts of traffic at extremely fast speeds. 

So, as carriers move to LTE and beyond, networks get more and more capable of feeding us tons of data at very high speed, and carriers convince us that we should pay more for that privilege, even if the data transfer for carriers gets more and more efficient, and less and less expensive. That doesn't sound like much of a fair deal to us. 

source: NYT

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posted on 23 Jan 2013, 15:46 14

1. ghostnexus (Posts: 96; Member since: 07 Mar 2012)

Petition that!

posted on 23 Jan 2013, 19:13 9

27. JohnnyBravo (Posts: 105; Member since: 02 Dec 2012)

seriously how do we get this going??? Carriers have too much power in the states. The charges are outrageous!!!

posted on 23 Jan 2013, 15:49 14

2. ajac09 (Posts: 1482; Member since: 30 Sep 2009)

All the carriers need to be hit with investigations on there pricing schemes.

posted on 23 Jan 2013, 20:45 1

34. Zero0 (Posts: 592; Member since: 05 Jul 2012)


One strand of optical fiber has a larger bandwidth than all of wireless radio. It's also serving a smaller population (one household). Mobile networks will be flooded if everyone uses them, at least for the foreseeable future.

posted on 23 Jan 2013, 15:51 4

3. mike2959 (Posts: 567; Member since: 08 Oct 2011)

My question is why my home Internet from Time Warner is any different? 60.00 a month and I can stream 24/7. At 20GB down. Unlimited. I understand everyone in my subdivision streams all at the same time yes it slows down, just like to many people on the same tower. The other thing is unlike wireless carriers, I have no choice in my home Internet provider, Time Warner could charge me 150.00 a month if they wanted to. What is hard to understand is why the wireless carriers are putting out land line companies with unlimited talking, which was a big deal 10 years ago not so much now, but the wireless companies will not take on home Internet providers? All it would take is either Verizon or At&T to go truly wireless.

posted on 23 Jan 2013, 18:11 1

25. lsutigers (Posts: 821; Member since: 08 Mar 2009)

Wireline will be the way of the past in the next few years. Sprint spun off it's residential wireline operations years ago leaving Verizon and AT&T as the only 2 carriers left with residential wireline operations, and even they agree, wireless is the future. Verizon Fios and AT&T Uverse has been somewhat of a flop, while it delivers fast data speeds due to fiber, they realized LTE is already here and can deliver that speed wirelessly, without the expensive infrastructure to every home. Verizon has stopped the expansion of Fios citing an expensive rollout for the return on investment. LTE is the wave of the future and Clearwire has already tested 100mbps + networks in the states. It's only a matter of time before AT&T and Verizon get rid or dissolve their wireline operations and move to wireless. Wireline is only beneficial to enterprise and government concerned with security which is why Sprint kept it's enterprise/government wireline operations. Even as global Tier 1 internet carriers like AT&T, Sprint and Verizon realize wireline fiber backbones will always be there, wireless is the future delivery mechanism to consumers.

posted on 23 Jan 2013, 15:52 5

4. mike2959 (Posts: 567; Member since: 08 Oct 2011)

I meant truly unlimited. Then the rest would follow.

posted on 24 Jan 2013, 03:39 3

38. rallyguy (Posts: 620; Member since: 13 Mar 2012)

Sprint has unlimited. Yes their service is not up to speed with Verizon. But that's why you pay the premium price for Verizon. Every company changes if the customer demands it. Right now, people are paying it so why change? If they started loosing millions of customers to Sprint I'm sure they would consider changing their business strategy to mirror Sprint.
Remember when we had "home calling areas" for mobile phones? Once one major competitor dropped it, they all had to.

posted on 23 Jan 2013, 16:01 4

5. glenwf (Posts: 11; Member since: 14 Jun 2012)

It's called a free market system. if you don't like the pricing, contract length, etc.... then go to another carrier or go prepaid. If you want the best, most reliable then go with the carrier in your area that offers the best and STFU

Also, for the writer of this piece who claims share plans are more expensive here's some basic math:

VZW 1 year ago: 700 min + unlim text + 2 smartphones, 2GB each = $159.99
VZW today: unlim minutes, unlim text, 4 GB shared data = $150

this math is almost identical for AT&T

posted on 23 Jan 2013, 16:13 3

6. HDShatter (Posts: 1021; Member since: 17 Jan 2013)

Tmobile prepaid $70 - unlimited everything no data throttle, with 4g data and soon lte.
tmobile $30 - 100 min of talk, unlimited texting, unlimited 3g data + 5gb of 4g data,

posted on 23 Jan 2013, 16:24 5

7. Whateverman (Posts: 3283; Member since: 17 May 2009)

The problem with the math you provided is, it's a "One sizes fits all" kind of solution that they are throwing out there with no alternative.

Take my account for example...

2 Smartphones w/ $30 unlimited data (Average about 3GBs - 4+GBs per month)
2 feature phones w/ data blocked
2 $5 texting plans
1400 minutes/month
total bill before taxes $180 / $225 after.

Now, no matter how you slice it, buying a phone out right to save my unlimited or going to shared data plan, my only option is to give VZW more money. That's why this article needed to be written. Thank you Michael!

posted on 23 Jan 2013, 16:25 4

8. akhi216 (Posts: 61; Member since: 01 May 2011)

You're missing the point which is that is they're charging 50 GB for LTE data that it's cheaper for them to provide and they're forcing people to pay for unlimted talk and text regardless of whether they need it or not.

Verizon has plans to offer LTE TV service in the future while they charge an arm and leg for service, they will presumably charge a fee for using the LTE TV service in addition to raping people with data charges...good luck with that.

posted on 23 Jan 2013, 16:34 7

9. MichaelHeller (Posts: 2705; Member since: 26 May 2011)

There are huge areas of the USA where the only choices for wireless service are Verizon and AT&T. That's not a free market, that's a duopoly.

posted on 23 Jan 2013, 16:36 2

10. goulav (Posts: 6; Member since: 03 Jan 2012)

The problem is; every carrier copies each other. If you want to do math - check and see which of the major carriers charge the least for sending a text message with no text package.... Plus, at&t and verizon hold over 80% of the customers. Also, why don't they offer a low minute, low text and high data plan?

posted on 23 Jan 2013, 17:14 1

13. androiddownsouth (Posts: 598; Member since: 02 May 2012)

Michael, should Verizon and AT&T be penalized for being the only carriers willing to operate in those areas? By what you said, if it weren't for them, there would be no coverage at all there. Other companies have the opportunity to place towers in those areas. The fact that they obviously choose not to is not the fault of VZW or AT&T.

posted on 23 Jan 2013, 17:23 3

16. belovedson (Posts: 1026; Member since: 30 Nov 2010)

thats not much of a free market when your plan is limited to a specific user.

most people who stream consumes more than 10gb's a month. whether its sitting in front of the tube or through mobile means.

people in the us need to smarten up and promote articles like this one. our country is leaking money out the sides and these companies att and verizon are allowed to abuse the avg consumer because they probably and most likely pay off the right people to continue to do so

posted on 23 Jan 2013, 17:28 3

17. belovedson (Posts: 1026; Member since: 30 Nov 2010)

finally some legit journalism. feed the people info like this and back it up with numbers.

also you might want to look up how obama's administration doesn't seem to f'en mind that tech companies profit margin is higher than the crap big oil pulled on us

posted on 23 Jan 2013, 17:29 3

18. belovedson (Posts: 1026; Member since: 30 Nov 2010)


are you blaming the people for companies building towers in order to make profit off of them? wtf

posted on 23 Jan 2013, 17:41 3

19. androiddownsouth (Posts: 598; Member since: 02 May 2012)

All I'm saying is the duopoly in certain areas is not due to anything negative on the part of VZW or AT&T. Other carriers have the same opportunity to provide service to these areas, but choose not to. It actually is the free market in action due to the fact that they chose to put towers in those areas and no other company did. At least they are willing to provide services to people living there.

posted on 23 Jan 2013, 17:51 3

20. Gawain (Posts: 420; Member since: 15 Apr 2010)

Not true, where T-Mo or Sprint are not available there are dozens of regional carriers. Using the back-woods to justify the argument doesn't work because those local/regional carriers are fiercly competitive, Cincinnati Bell and Bluegrass Cellular are two prime examples.

Also, you did not offer any insight to the fact that the carriers paid billions just to have the right to build out the network. Verizon paid somewhere north of $10B for C-Block, that was before a single LTE panel was even lit up. Don't be so quick to discount the cost of building the network either, besides the infrastructure, the people involved are the single most expensive element in the whole equation.

posted on 23 Jan 2013, 17:54 2

23. Joshing4fun (Posts: 1237; Member since: 13 Aug 2010)

Free market=the right to screw us over.
Definitely not.

posted on 23 Jan 2013, 19:19 3

28. JohnnyBravo (Posts: 105; Member since: 02 Dec 2012)

maybe they dont have the resources to place towers there. Point is ATT and Verizon are TOO strong. Dan Hesse has even said there is a HUGE gap between Att/Verizon and Sprint, who is the third largest carrier in the states. Its like comparing Saturn to Pluto. Hell T-Mo is even pondering leaving the states as one of their execs said that there isnt any room for a 4th carrier.

I love Verizon's coverage but their pricing sucks!!! I understand that you pay for what you get but it shouldnt be this high.

posted on 23 Jan 2013, 19:28 1

30. kevv2288 (unregistered)

My plan one year ago 1 smartphone with 450 mins unlimited nights and weekends unlimited texts and 4gb data( double the data offer so would normally be 2gb) - $89.99

New plans 1 smartphone unlimited talk and text (your only option is unlimited talk and text even if u used most your minutes at night or to other vzw phones you don't have a choice ) and 2gb data is $100 a month and with 4gb is $110 a month so yeah definitely more expensive for me on the new plans if I switch

posted on 23 Jan 2013, 20:21 1

33. androiddownsouth (Posts: 598; Member since: 02 May 2012)

That is like penalizing someone for being TOO successful. I too wish the pricing were lower, but the company obviously reinvests more money into it's infrastructure than anyone else, thus providing service in more places more reliably than other carriers. Being more reliable is what Verizon is known for, and for good reason.

I don't have an answer for the pricing issue, and I'm not necessarily defending it. I'm just saying Verizon is the largest carrier for a reason, and since it isn't low prices it must be the quality of the network.

posted on 24 Jan 2013, 03:42 1

39. rallyguy (Posts: 620; Member since: 13 Mar 2012)

"my only option is to give VZW more money"

Why not switch to a different carrier? Why should they change if you are going to keep feeding them your money?

posted on 24 Jan 2013, 03:45

40. rallyguy (Posts: 620; Member since: 13 Mar 2012)

You can also go pre-paid. While in the end those might be your two cheapest options, that is one of the things you have to acccept living in a rural area. The profit margin isn't there for them to invest millions of dollars and only get thousands in return.

posted on 24 Jan 2013, 03:52

41. rallyguy (Posts: 620; Member since: 13 Mar 2012)

I'm on a Sprint SERO premium plan.

$50 a month
500 anytime minutes
free nights and weekends
unlimited mobile to mobile
unlimited texting
unlimited data

It used to be $30 a month for the same thing without being able to get a modern phone. It was available to anyone who wanted it years ago. I sent the offer/plan to all of my friends, not one of them signed up for it. Now they bitch how much Verizon costs.

posted on 24 Jan 2013, 08:48 3

45. troutsy (Posts: 316; Member since: 17 Feb 2012)

I guess basic math isn't enough to answer this problem, gotta graduate to the college level stuff. I think it's more likely that the majority of the users on this forum have unlimited data/corporate discounts than those that walk into the store and get a capped data plan with no discounts.

VZW unlimited plan (700 min, 500 text (unlim to VZW), 2 smartphones unlimited data) = $149.96
With a corporate discount (8% on plan, 12% for features) = $141.56

VZW shared plan (unlim min, unlim text, 4GB data, 2 smartphones) = $150
with a corporate discount (8% on plan, 12% for features) = $144.40

DOOOOOD, unlimited data gets dropped and the cost goes up? PASS

posted on 24 Jan 2013, 09:07 2

46. deviantirish79 (Posts: 26; Member since: 23 Jan 2012)

That is the same reason here. If i switched my plan to the Share everything plan, my bill would go up almost $30 because of 4 smartphones and 1 feature phone.
I will stick to the unlimited plans I have and buy phones outright.

I refuse to pay more for less!

posted on 24 Jan 2013, 10:32 1

47. Whateverman (Posts: 3283; Member since: 17 May 2009)

Because I'm under contract for a few more months and I don't want to pay the ETF either.

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