4G data plans: Price wars already?

4G data plans: Price wars already?

Summary: Verizon Wireless' data pricing for its 4G network---$50 a month for 5 GB of usage---already has a few analysts pondering price wars.

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Verizon Wireless' data pricing for its 4G network---$50 a month for 5 GB of usage---already has a few analysts pondering price wars.

Verizon's pricing on the surface is cheaper than the $60 a month charged for 3G data service.

Chistopher Larsen, a Piper Jaffray analyst, tackled the issue in a research note. The upshot: 4G pricing will have its share of competition and price wars will emerge.

Now there are a few catches with Verizon's 4G pricing. Usage will spike so that 5 GB may be stingy.

Larsen outlines the following:

  • 3G users will have to upgrade to 4G handsets for cheaper pricing. That fact benefits Verizon.
  • Verizon will enjoy better economics with its 4G network so can maintain margins at lower prices.
  • Verizon seems to be betting that some folks will go with the 10 GB plan for $80 a month.
  • And the LTE pricing from Verizon looks like it's designed to squeeze Sprint and Clearwire.

That last point highlights how we could get a 4G price war. Larsen writes:

On the competitive front, there is only one other commercially available 4G network today: the WiMAX network of Sprint and Clearwire. (We’ll ignore T-Mobile’s HSPA+ network for now.) Sprint charges $60 per month for unlimited 4G data usage, but this only includes 5GB of 3G usage per month. In light of Verizon’s price announcement, Sprint could either choose to cut its price to $50 or keep its price and highlight that customers get unlimited 4G (not 3G) usage with the Sprint plan. There are a few issues with this second option, however. One, Sprint’s 4G coverage isn’t ubiquitous so consumers may find themselves hitting a 3G usage cap. Two, Sprint’s wholesale 4G arrangement, with potentially weaker economics, may be less able to digest a price cut. Finally, Sprint may end up conceding the lowest usage (read: most profitable) subscribers to Verizon while keeping the highest usage ones, hurting margins.

Add it up and it's early to declare a data pricing war, but it's safe to say there will be one.

Related:

Topics: Hardware, Mobility, Telcos, Verizon, Wi-Fi

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10 comments
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  • RE: 4G data plans: Price wars already?

    I have sprint's 3g/4g broadband aircard. I only use 3g to check my yahoo emails on my personal laptop when I'm at work (because 4g doesn't work there), otherwise it is 4g all the way,.... great reception / speed even when only '2 bars' .. I watch hulu / netflicks and never go over the %59.95/mo cost. Wouldn't go with verizon for broadband even though I have their droid-x for my cell service.
    Violetw
  • RE: 4G data plans: Price wars already?

    Sprint charges an extra 10/month for 4G capable phones, so add that cost to the 60/month.
    tsrich
    • Yeah, but that is on phones... not hotspots..

      @tsrich If you have an EVO, 69 gets you unlimited 3G data...+ 10 for unlimited 4G data. No caps on phones for the 3G data, just on the hotspots.

      If you want to use your Evo as a hotspot... it is 30 more dollars.
      condelirios
      • RE: 4G data plans: Price wars already?

        @condelirios unless you root it. Then its free.
        Jimster480
    • RE: 4G data plans: Price wars already?

      "And the LTE pricing from Verizon looks like its designed to squeeze Sprint and Clearwire." What are you talking about? Verizon wants to charge users $50 a month just for data and for a stingy 5GB ($80 for 10GB)... Sprint offers phone and data (unlimited) for as low as $69.95 on 3G and $79.95 for 4G. That blows Verizon out of the water on pricing... it's not even close.<br><br>Add to that Sprint has jumped to #2 in overall customer satisfaction and Verizon (although still number one for now) drop a percentage point from last year.<br><br><a href="http://money.cnn.com/2010/12/06/technology/consumer_reports_att/index.htm?hpt=T2" target="_blank" rel="nofollow">http://money.cnn.com/2010/12/06/technology/consumer_reports_att/index.htm?hpt=T2</a><br><br>I know there are literally millions of users anxiously awaiting for the iPhone to become available on Verizon. I can't wait to see what happens with Verizon's network and customer satisfaction rating once all the heavy data usage iPhone attack.

      Of course Verizon will throttle down speeds on users so you may pay for 4G, but when you use it Verizon will penalize and throttle back your speed. Can't wait for the class action lawsuit to hit Verizon for their throttling back practices.
      Masari.Jones
    • RE: 4G data plans: Price wars already?

      @tsrich No. That is $10 on top of your cell plan. So its much cheaper than Verizon lte considering you can get an evo and 4g for $10 a month more than just stand alone 4g
      Jimster480
  • RE: 4G data plans: Price wars already?

    From what I understand the data cap on Sprint only applies to their aircards and tethering. So if you have one of the high-end 4g phones and you're not tethering, the data is unlimited @ $80/month. That's the $70 plan + the $10 Premium data fee.<br>Saying that there is a cap without clarifying what the cap is on isn't really being fair to Sprint.<br>Also, calling Sprint's WiMax network 4G, when it's more like 3.5G isn't really being fair to Verizon.<br>I agree that the price wars may be coming more quickly than many of us anticipated, but if you're going to write an article about it, it might help people to know exactly what services you're writing about to begin with. This kind of thing can be somewhat confusing and the previous post proves that. You are giving the pricing for Sprint's mobile broadband without stating that fact and tsrich automatically went to the phone end of it. This also made them state the incorrect price for the phone service as it is $10 higher prior to the premium data charge than the broadband to begin with.<br>Too many people start spouting off others facts these days in the printed media without enough detail for the average user to be clear on the facts.<br><br>As for the price wars... Bring 'em on!!! I needs me some cheap data plans!!! :-P<br>Just my opinion,... based on the facts.
    darii@...
    • RE: 4G data plans: Price wars already?

      @darii@... but then no one's "4g" really qualifies as yet, the specifications for 4g include speed and being a new network. Verizon and sprint have the new networks, but not the speed as yet.
      kevinrs1
  • RE: 4G data plans: Price wars already?

    Don't count TMobile out.....their service is good and their customer service is better than any other cell provider that I have dealt with.
    cmwade1977
  • RE: 4G data plans: Price wars already?

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