Verizon Wireless: No big rush to tiered data plans (for now)

Verizon Wireless: No big rush to tiered data plans (for now)

Summary: The wireless industry is holding its collective breath to see if Verizon Wireless follows AT&T's tiered data plans and will have to wait a little longer to see if the largest wireless carrier follows suit.

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The wireless industry is holding its collective breath to see if Verizon Wireless follows AT&T's tiered data plans and will have to wait a little longer to see if the largest wireless carrier follows suit. A Verizon executive was non-committal on tiered data plans after the company reported earnings.

AT&T on Thursday reported earnings and said its tiered data plans have been well received. As a refresher, AT&T’s pricing model includes 2GB of data for $25 a month and $10 a month beyond for each $1GB over the cap. AT&T also has a lower $15 plan for 200MB of data usage a month. Analysts largely expect Verizon Wireless to follow AT&T on tiered data plans and then the rest of the industry can follow. The conventional thinking is that tiered wireless data plans benefit the industry overall because it better matches network costs with data consumption.

Will Verizon Wireless hop on the tiered data bandwagon? Verizon CFO John Killian sent a few mixed signals. You could read Killian's comments to imply that tiered plans will be the norm on Verizon Wireless' 4G plans coming in the fourth quarter. However, Verizon appears to be willing to sit back on tiered data plans for 3G service---especially while it is selling a lot of Droid devices. Simply put, there's a lot of nuance with Verizon's statements on tiered plans.

Here's what Killian said on the earnings conference call when asked about whether Verizon would follow AT&T:

It is very early days since that change went in. What I would tell you is is our business continues to perform extremely well. That our smartphone lineup is being very well received. Our Droid lineup we have trouble keeping the Droids in stock. By the way, we don't have a big supply problem here. There is a little bit of a delay in fulfillment, but we are in a good position there. So our business is continuing to perform extremely well. You have not seen us rush out to make any kind of a change. We will continue to monitor the situation, of course, and look at opportunities that will say what is the best equation for us to drive long-term shareholder value, and we will be very focused on that. I cannot say enough, though, about the opportunity we see ahead given where we are today with smart phone penetration. I mean I think 20% of our base today, where is that number going ultimately? Is it 80%? Some people could argue everyone is going to have a smartphone ultimately because that is the kind of device it is going to be. So I think there is tremendous opportunity to continue to drive and create value through Verizon Wireless.

That almost sounds like a company that's looking to grab some smartphone share just in case AT&T's plans turn off new users. Killian added that Verizon has the supply of Android devices to grab share.

From a supply chain perspective on supply of smartphones, we need to manage through it, which we are. These are kind of global issues with certain devices, but we are in a good position here. We think we can fulfill the requirements we have as we go through the second half of the year. We are working extremely closely with all of our manufacturers, and we think we are extremely well positioned.

So does this mean Verizon Wireless is going to leave AT&T on data cap island?

Not so fast. Tiered pricing is on the table at Verizon Wireless. Killian said:

On pricing we are performing extremely well right now. If you look at our data revenues this quarter, they are up about 24% year on year. If you look at data ARPU for our postpaid base, they are up over 19%. Again, as I said to you earlier, a lot of upside potential there, given where we are around smartphones and multimedia devices in the future.

We have indicated in the past, as we move to an LTE world and LTE pricing, we will probably look very hard at tiered pricing, and that continues to be our thinking right now. So more to come on that. By the way, I should say that all of our efforts, all of our plans on getting LTE launched in the fourth quarter are on schedule.

Bottom line: Verizon Wireless may not match AT&T exactly, but the tiered plans are being pondered.

Related: Tiered mobile data plans accelerate: Verizon Wireless to follow AT&T's lead

Topics: AT&T, Hardware, Mobility, Smartphones, Verizon

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5 comments
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  • RE: Verizon Wireless: No big rush to tiered data plans (for now)

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  • RE: Verizon Wireless: No big rush to tiered data plans (for now)

    VZW would be dumb to follow ATT on its tiered pricing especially as their plans and pricing are doing very well for them and their customers.
    Even if thry do go tiered I dont Carr because I'm on Sprint and they have no plans for tiered pricing.
    Jimster480
    • When you are #3 or #4 ...

      @Jimster480 ... you cannot aford to raise your prices until you have the volume to justify it. VZW and ATT are competing for first place (not 3rd or 4th) so tha can afford to raise prices to pay for the build-out of 4G.
      M Wagner
  • RE: Verizon Wireless: No big rush to tiered data plans (for now)

    VerizonWireless is not dumb ... they offer a premium service at premium prices. I think they will see which way the wind blows with ATT and if customers respond well, we will see tiered pricing (because VZW is not going to leave money on the table either).

    I think that for the vast majority of us, average usages will dictate that our plans won't change much. Those who use excessive (abusive) amounts of data will pay for that usage.

    Keep in mind that AT&T is still way behind VZW on its 3G rollout (let alone 4G). AT&T may need to generate data revenues in order to spend what it takes to catch up.

    VZW remains aggressive on its build-out and can appearntly afford to expand its network without raisign its prices.
    M Wagner
    • RE: Verizon Wireless: No big rush to tiered data plans (for now)

      @mwagner@... Abusive? HUH? IF you offer an UNLIMITED plan.. NO AMOUNT OF USE IS ABUSIVE. If you don't want people to use all the data they can use, Don't offer UNLIMITED plans. I am happy AT&T got a clue and started offering those plans. I think they are going to lose business to Sprint and Verizon who are offering UNLIMITED plans....and much cheaper in the case of Sprint... but at least they aren't using those lame words like "data hogs", "abusive users" after offering up an Unlimited plan. That is just plain idiotic...and it obviously irritates most of us to no end.
      condelirios