Verizon is considering adjusting its data plan pricing as it prepares to launch its next-generation 4G wireless network. Not only will the network price data plans based on the amount of data consumed, it may also price data plans based on the speed of the connection itself.
"If you want to pay for less speed, you'll pay for less speed and consume more, or you can pay for high speed and consume less," ?Verizon CFO Fran Shammo told The Wall Street Journal in an interview, explaining the possibilities offered by the new pricing.
Verizon's 4G network is set to debut in 38 cities around the United States by year-end offering speeds between one and 12 megabits per second of data. (It's not true 4G, which would require downloads of 100 Mbps). However, the actual pricing for the new higher-speed connection is still not yet determined.
More Tiered Pricing
Currently, Verizon is testing a low-end $15 per month promotional pricing plan which will be offered through the end of December. The plan provides 200 megabytes of data, limiting the number of downloads, emails and Web-enabled apps customers can access.
And as the company rolls out its 4G network, it plans to move further into tiered pricing in order to give its customers more options of how much (or little) they want to pay. This doesn't necessarily spell the end of Verizon's unlimited data plans though, Seidenberg said. "We need to get into it, figure out what the customer thinks is fair, and go from there," Seidenberg explained in a WSJ interview.
LTE Devices on Their Way
He also said that Verizon will introduce a number of new devices supporting the LTE technology at the upcoming Consumer Electronics Show in Las Vegas, but would not comment on whether or not any of the new devices would include a Verizon iPhone. "If the iPhone comes to us, it's because Apple thinks it's time," he said. Seidenberg also mentioned that Verizon's LTE network has drawn Apple's interest and helped the company get the iPad on its network.
Verizon thinks its 4G network will lead to an explosion of data consumption on mobile devices, and, by 2016 or 2017, estimates that 30% of its customers will use a GB of data per month. That's a more conservative estimate than independent wireless analyst Chetan Sharma predicted earlier this year. He said that the average customer will consume 4 GB of data per month within three years. It seems tiered pricing functions as a roadblock, attempting to slow down the level of data consumption we would otherwise see.
There are arguments both for and against tiered pricing plans. On the one hand, tiered plans allow for more low-end options through the introduction of data caps. That means people who couldn't have otherwise afforded it, now have the ability to own a smartphone. However, consumers don't have a clear grasp of what a megabit, megabyte or gigabyte of data is nor how much data is associated with using a particular function -like a download, using an app, surfing the Web or checking email. One could easily argue that they shouldn't have to know the difference - the carriers should simply offer affordable unlimited plans as anything else will hamper real-world adoption of smartphones and their capabilities. In other words, if you don't know how much data you use, you'll always be worried about going over and being charged. The easiest solution is to not use data much at all.
At least the option to pay for 4G would be clearer: pay more for faster speed or don't.