Analysts see Verizon following AT&T's move to cut unlimited data

Analysts see Verizon following AT&T's move to cut unlimited data
If AT&T wanted to shake things up before Apple officially announces the next iteration of the iPhone, then they surely did their job by announcing their plan to cut their unlimited data plans. One of the biggest questions surrounding the untimely death of unlimited data usage is which wireless carrier would be the next in line to follow suit. Analysts believe that the most likely candidate would be AT&T's main competitor – Verizon Wireless. We've seen constantly in the past how both companies feed from one another as one would make a change and the other would quickly follow suit – even their pricing structures for their mobile plans are somewhat similar. Nielsen wireless specialist Roger Entner believes that Verizon would benefit greatly by pulling the plug on its unlimited data plan – which may some day become overloaded as more customers rely on data eating smartphones. He said, “The one that has probably to move the quickest is Verizon ... they're growing and their data consumption is growing substantially.” Executives at Verizon have already fancied the idea of moving away from unlimited plans once their LTE network goes live later in the year.

On the other hand, T-Mobile and Sprint are unlikely to make any rash moves and retain their current stance of offering unlimited data services. We've already heard Dan Hesse say in an email that Sprint doesn't have any current plans on changing their data plans, but it could still be a possibility someday. Both T-Mobile and Sprint have been losing customers and don't seem to be too strained in network capacity – which could play to the fact that they can still attract customers with their low-cost and affordable solutions. However, with the launch of the HTC EVO 4G, it will surely test Sprint's network to its fullest.

source: Reuters

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39 Comments

1. ICanAffordVZW

Posts: 123; Member since: Dec 15, 2008

Thank you, captain obvious...

21. PapaJay224

Posts: 866; Member since: Feb 08, 2009

Wont happen, we may do it for MultiMedia phones aka (dumb phones) , But we are, and have been able to sustain the Data. I garentee ATT is doing this so they can claim Fastes 3G because its limited to the people who are on it.

2. hallfrankg

Posts: 30; Member since: Nov 16, 2009

This guy changes his Nick name here all the time.. MR VZW.. geezz what a prick

3. tuminatr

Posts: 1123; Member since: Feb 23, 2009

I am not convinced, Verizon is making a big push for smarphones

20. JeffdaBeat unregistered

Verizon was one of the original companies talking about tiered pricing for cell phones. And like it or not, this is something you will see on every carrier going forward. They gave folks unlimited because not many people had smartphones...now even 10 year olds are carrying around Blackberries. With the amount of Wifi available, no one really needs unlimited on their phones. Still, I would have been more of a fan of the 5GB for $30...which seems to be the industry standard...

4. killingthemonk

Posts: 52; Member since: Feb 19, 2009

"We've seen constantly in the past how both companies feed from one another as one would make a change and the other would quickly follow suit " CORRECTION: We've seen constantly in the past how AT&T feeds off Verizon Wireless as it changes to quickly follow suit.

5. uknow85

Posts: 38; Member since: May 28, 2009

thats the dumbest shit ever whuy not have unlimited data plan with almost every phone being a smart phone so everybody can go over the data plan and fuck there bill up on a monthly basis crazy

11. whocares

Posts: 235; Member since: Dec 19, 2009

98% of the the 87 million customers use less than 2gb. think about it. its obviously for the customer. most people that say they go over are probably lying unless they are using a data card.

6. BlackberryUser

Posts: 609; Member since: Jun 26, 2009

I wouldn't be surpised to see Verizon follow suit, but hopefully they continue to offer an unlimited option. Additionally hopefully their caps are higher and tethering data continues to be separate from regular data. 2gb is not enough, I reach the 5gb limit on my air card/mifi all the time. I travel a lot and it becomes a constant internet connection for me. Tiered pricing to offer customers more data options ranging from 1gb to unlimited would be good though, this would allow more people to take advantage of smart phones / air cards. Not everybody needs unlimited data.

7. freemarketeer

Posts: 28; Member since: Jun 05, 2010

I'm surprised by how little is known of the basic underlying economic principles regarding making something "unlimited". First off, there are no "infinite" resources whether it is water, oil, or bandwith on a wireless carrier. When wireless data was first introduced almost a decade ago, carriers could afford to offer unlimited usage because there were at the time very few users for the amount of space available on the network. As the number of people utilizing wireless data has increased, first starting with mobile broadband cards and now with smartphones, there is a lot less data to go around. To say that if you "dropped the price" or made it unlimited more people would adopt the service and the company would be better off. Here's a simple example of why this isn't true. Take iPhone users on ATT. Roughly 5% of iPhone users use 40% of ATT's network capacity yet they still pay the same as the person who uses .00006%. In these cases, lower end users are subsidizing the usage of high end users. With a tiered data structure, those high-end users who demand more of the network's resources pay a proportionate amount of the cost. This has the effect of some users using less thereby freeing up bandwith for more users to utilize. It is the same as "free" healthcare or education. Also for those who whine about overages and the like, realize that you and your carrier agree to "x" amount of GB's for "y" price. When you begin to exceed that, there is an incremental cost for the carrier that is passed on to you- simple as that.

12. BlackberryUser

Posts: 609; Member since: Jun 26, 2009

Like I said above, I don't disagree with tiered pricing, but I think an unlimited option needs to be available. The cost should more accurately reflect the cost to deliver the service. As for "infinite" resources, internet is slightly different. The internet is just a huge network, so theoretically it is infiinite. If you add more connections, faster connections, more servers, etc.... Oil can not be replenished and is a truley limited resource. Internet today isn't what it was 10 years ago, the back bones of internet are larger pipelines. Fiber speeds are jumping up to 100gb connections in data centers. Data centers are popping up EVERYWHERE, etc...

16. plyfulgentleman

Posts: 43; Member since: Jul 17, 2008

Freemarketeer has a valid point to certain extent. I distinctly remember the auctioning of bandwidth several years ago for the purpose of using 3g-4g networks, with that said the underlying theme for AT&T move is simply an exhausted and over-congested network. This would be a viable alternative for those Iphone users that doesn't want to pay an $30/month amount but rather pay the tiered pricing. It makes alot of sense for AT&T to do this not only for the x amount of iphone users who haven't hacked (jailbreakd) their phones. But ultimately they're doing this tiered pricing for the sole purpose of freeing up those iphones that suck the life out of their weak 3g network. I agree HSPA/UMTS is quite faster than REV O, but the fact of the matter is coverage is an issue when it comes to AT&T when is comes to 3g coverage and Iphone. With that said, i would like to see each company keep an unlimited data plan. Why? simply put convenience and easy access! how much is that worth I'd gladly pay $40-50 for unlimited data plan when 4g rolls out. As for the business side of things only the consumers and users has the ultimate say in this matter. If and when VZW follows suit with tiered pricing and the revolt begins you will see the pendulum swing to the other side. But only time will tell though

25. freemarketeer

Posts: 28; Member since: Jun 05, 2010

The laws of supply and demand apply to any and all things in a market. If data is unlimited as you say, then the price would be near zero because carriers would have abundant supplies and would undercut each other until that point. And yes, while the network infrastructure is far more advanced than a decade ago, so are the methods in which data is consumed as well. It is not as if the demand for data is static while the supply increases. It is easy to forget that when it comes to markets that have constant innovation and short product life cycles that the wireless service of today is not comparable with the wireless service of yesterday. Think of what kind of computer $2000 could buy you today comparatively with one from 5 years ago.

26. freemarketeer

Posts: 28; Member since: Jun 05, 2010

What each carrier decides to do will be based on what is financially viable and profitable for them (and remember that for a company to be profitable it must attract consumers to their product). In the next 2-3 years, the quality and capability of each of the Big Four's networks will be shown in greater contrast with Verizon becoming the undisputed leader. Verizon's profitability and consistent investments in their network infrastructure will allow them to roll their 4G network out faster than their competitors and with this deployment will see even higher profitability as their cost per MB goes down (4G generally is 66% cheaper than 3G per MB). VZW will leverage not only their larger footprint over AT&T but will probably be providing the service at cheaper rates. They will also have the added benefit of possessing twice the spectrum depth than AT&T allowing them to have greater bandwith and faster overall speeds. To AT&T's reasons for going to tiered pricing; their network has reached the point where it cannot sustain "unlimited" usage plans anymore. This will eventually happen to every carrier however AT&T's failure to adequately invest in their network and anticipate the growth of mobile data merely hastened the need for them to do this. Sprint and T-Mobile have been shedding customer's so their networks are becoming more vacant and Verizon is able to sustain for now due to proper planning and investment however from a long-term perspective, they will have to make the switch as well at some point. The next major change that will happen within the wireless industry with regards to pricing will be the move away from current voice/text/data pricing models to block data pricing wherein the customer would simply purchase a block of data (ex. 40 GB) and could use it any way they wished, either for voice, text or data. The benefits of such pricing to the consumer will be the flexibility such a structure allows as well as the ability to connect any type of compatible device (4G networks will see a dramatic increase in the number of non-phone devices utilizing wireless connections).

30. plyfulgentleman

Posts: 43; Member since: Jul 17, 2008

block pricing hmmmm i dont know about that one. so is it safe to say 40GB for $500 for a family of 5. I dont know about that. But i sure as hell agree what you said on 2nd paragraph, totally agreed with it.

35. freemarketeer

Posts: 28; Member since: Jun 05, 2010

I believe that block pricing is what will be next however due to 4G's substantially lower cost per megabyte, the traditionally $60/5GB will be changed considerably. Verizon has already indicated that they intend to begin transitioning voice to LTE in 2012 which would support this change and whether it is voice, text or data it will all be using the same part of the network so there would be no need or point to continue to bill separately for these uses.

39. BlackberryUser

Posts: 609; Member since: Jun 26, 2009

I can see it transitioning to a block of data, but I feel companies like Verizon will try to anticipate demand and build out their network as opposed to take the AT&T approach. As more devices go IP, data usage will increase exponentially. Putting a cap on data usage will just slow down the progression of technology. Verizon will continue to charge a pretty penny for their service to pay for the improved services. I think the solution is to move to newer technology as opposed to putting a 2gb cap on data usage. If AT&T put out a 10gb cap on smart phones I don't think anybody would be complaining. Also tethering should offer an additional 5gb of data at least, maybe pulling both from the same pool. I don't necessarily need an unlimited plan, but I expect a fair price for data.

8. testman22

Posts: 339; Member since: Nov 03, 2009

As long as I get set up with a sweet phone ala droid shadow, before they make the change, ill be golden

13. BlackberryUser

Posts: 609; Member since: Jun 26, 2009

I read that upgrading your phone won't force you to lose your unlimited plan, just if you make a change to your plan.

9. rgwisk

Posts: 1; Member since: Apr 09, 2008

AT&T raised ETF's then shortly after dropped the unlimited data plan. I have an issue with a company doing that. VZW should continue to be strategic with their customer base. With the push for smartphones, I seriously hope they don't change the data packages they offer. We all saw the bad press on the net when AT&T made their change.

10. majicc07

Posts: 28; Member since: May 07, 2009

So what you are saying is and I'll use a simple analogy. You don't wanna do something but because you are so worried what others think of you you still do it even though it's wither wrong or stupid. Look people like the person said earlier there was a time when unlimited data was easy to offer being networks were able to support them. We now live in a time where that's changing and we need to change with it. So let's leave it your way and have unlimited for everyone. Then you will wonder why you can't get a signal or your speeds are so slow the next thing you will bitch about is that. Spectrum is not an unlimited resource and if you have read it's running out. Also wireless is not the only one using it so there is that as well. People maybe unhappy with the move but it was a necessary move. Wifi is pretty much everywhere these days and it was AT&T to offer it first for free several years before Vz. Vz will follow soon being they are now seeing a large increase in data usage since launching their top data devices. It's a very smart move. As for the ETF's, another smart move. Reason for that is too many people buying iPhones and then cancelling contract and then putting them on eBay. What we need to realize is it's business people. If it were our business we would do whatever it took to keep it alive and profitable. We as customers take it personel but we don't have their bottom line to meet.

14. BlackberryUser

Posts: 609; Member since: Jun 26, 2009

I disagree with you 100%... They shouldn't limit data, they should just increase the pipeline to the cell sites and add more cell sites. If the cost to deliver this bandwidth increases their overhead, then set internet costs accurately. Having tiered pricing isn't bad, but an unlimited option should be available.

17. plyfulgentleman

Posts: 43; Member since: Jul 17, 2008

my opinion to why AT&T is going tiered...4th gen Iphone is gonna seep the hell outta their network! why...1) multi-tasking...i can already see it...good luck with that. 2) Tethering...OMG are us sirius! i know it's only speculation but why would you get a 4th gen iphone when the iphone 3g jailbreaked can tether already. 3) now this is the killer...video conferencing...if you thought you had issues wait till AT&T customer serv gets their calls. The forementioned items are the reasons why AT&T are tiered pricing their data plans. Why do you think would anyone do that if not for the launch of the next gen iphone. all remarks are welcomed.

18. BlackberryUser

Posts: 609; Member since: Jun 26, 2009

I think you're on the right track... So you bring up an important part of the new iPhone. Video conferencing will use a lot of bandwidth, how quickly will you burn through 2gb if you use the video phone.

19. iHateCrapple

Posts: 734; Member since: Feb 12, 2010

So basically what you guys are talking about is customers will be able to pay a little bit less for even crappier/slower service? Because that's what's gonna happen, especially with the video conferencing capability... Yea they might have beefed it up some since all the comotion but its not gonna be enough, IMO. Unless crApple fixed/changed the antennas' in the phones.

23. vzw fanman

Posts: 1977; Member since: Dec 11, 2008

i already do video conferencing, it works great.

24. E.N.

Posts: 2610; Member since: Jan 25, 2009

Oh dang plyfulgentleman, you're so right. At&t's network is going to die. I still want the new iPhone though, haha.

27. freemarketeer

Posts: 28; Member since: Jun 05, 2010

Apparently you're unfamiliar with the concept of incremental cost. Here's an analogy to help you understand why what you're proposing doesn't make much sense economically. Say there is the "unlimited" all you can eat buffet that has 95 people eating there which requires 6 cooks at $10/hr for 4 hours and a food cost of $1k. And in walks a family of 5 trailer park, lard-ass, deadbeats who are happy to pay the $20 per person cost because they intend to sit and eat for all day and all night. These folks proceed to consume 50% of all the food available. Now other patrons are finding that what they want to eat isn't available or they have to wait for one of these fatasses to move before they can get what they want. Some may decide that it isn't worth their money and leave. Let's assume that the owner goes by your advice and now hires another 3 cooks for $10/hr and doubles his food order. So now the owner is paying $2360 in expenses for only $2000 in revenue- he's losing money and we haven't even counted the more profitable customers that may have left. He's going to take your advice and tier the pricing out but still offer an unlimited plan. These people will still consume the same amount of food as before. Since they are using 50% of the resources, he would need to charge them $236 per person just to break even! Now can you honestly say that a) a reasonable person would pay that amount and b) that the owner might just take the loss of those five customers instead of the additional expense to service them and attempt to attract more profitable customers. This is true for every carrier it's just that some have a larger buffet is all. The intention of the owner with the all-you-can eat buffet is so that customer's wouldn't worry about grabbing one extra roll or a little bit more turkey, not to allow for fat cheapskates to gorge themselves at the expense of everyone else.

29. plyfulgentleman

Posts: 43; Member since: Jul 17, 2008

Your analogy almost hit the bulls-eye but missed it by that much...well lets take a look here, if all sense is common lets use it here shall we. I do agree for us lard asses (as you have so delicately put it) can hamper and burden a network. But cost is a big concern for you? why? Hmmmm could it be that you have some stake in the wireless industry? Okay I may not have the numbers or the figures to actually debate your analogy but here's my two sense. Lets say your right and cell companies are losing the battle from us lard asses that drain so much bandwidth and there losing profits from it. I don't think from the profit margin year in and out that Big Red and AT&T is bringing in (except perhaps sprint and TMo) their losing money. For the last 3 years have we only, as a industry seen a boom of data seeping devices ex. Pda's, smartphones, and HTML capable devices. lets make dis simpler lets say that 100 hundred people represent the total pop of people using the cell phones. Would you agree that lard asses only comprises perhaps 5-10% of the whole. I'd even go as high as 15% and lets take into account the mass market only fancies style rather than purposeful usage like lard asses like myself would use it. I would like to add most people that blog here are the lard asses that you refer to. But i digress, let me get back to my analogy of the 100, if those same 15% were to use it at the same time and it does hamper the network, i would definitely be complaining. Why, most lard asses already pay in principle pay 30-40% more on their bills. shouldn't that count as enough revenue stream that companies like AT&T and big RED do what it takes to keep these high tiered customers. it would behoove cell phone companies to cater to lard asses cause ultimately we pay for what we want and need. I used to remember when i was paying $45 dollars on my treo 600 to access data unlimited 3 years ago and extra 15 to tether. But a year after that it has gone down to 29.99. Hmmm, wonder why? Is it because and perhaps companies like AT&T over advertise but fall short on delivery. I do understand where the industry is going. I do believe Big Red will follow suit to increase revenue. who loses out...yes of course we lard asses do. but as soon as these companies see the folly of there stupidity and a steady dip in revenue and gross add-on dont meet expectations...Bam, unlimited comes back. Remember 4 years ago when the biggest deal was overage on minutes. now thats a non issue. why you may ask cuz the market is data driven and data centric...but my thumbs starting to hurt from all this typing.. peace!

31. plyfulgentleman

Posts: 43; Member since: Jul 17, 2008

really...is dat rite? i take it you have a android device? ;-)

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