Verizon Overhauls Its Rate Plans, Focusing on Shared Data
In a major shakeup to how it handles its billing, Verizon Wireless plans to start charging customers almost exclusively based on how much data they are using, rather than on the amount of phone calls or text messages sent.
The plans, known as “Share Everything,” allow users an unlimited number of calls and texts and also allow data usage to be pooled among up to 10 devices on one account. With the move, Verizon becomes the first U.S. carrier to offer the ability for customers to share a bucket of data across multiple devices. AT&T has also said it is working on plans that will allow such sharing, though it has yet to detail its plans.
Verizon’s monthly charges are based on two factors–the number and type of devices a person or family has and the amount of data they want to use. The per-device charges range from $40 for each smartphone to $10 for a tablet, while the data portion ranges from $50 for 1GB to $100 for 10GB.
The new plans will go into effect June 28 and be the only option available to new customers.
Verizon is looking to do several things with the rate plan changes. First, the plans are designed to encourage customers to use more devices by allowing them to share a pool of gigabytes for use across a number of different devices.
“Customers want the ability to connect anytime, anywhere,” Verizon Wireless marketing chief Tami Erwin said in an interview on Monday.
The carrier has been telegraphing this move for a while. Speaking at an investor conference last month, Verizon Communications CFO Fran Shammo promised new shared data rate plans that would be a game changer for the industry.
“We think we have something that is very different, very innovative, something that really hasn’t been tried before in the industry and you will see that this midsummer,” Shammo said.
Verizon’s new plans are also a recognition that customer usage patterns are changing. Traditionally, most of a cellular bill was attributed to calling and texting, but usage of both is likely to drop over time due to the rise of alternative services like Skype, iMessage and WhatsApp.
Though a radical change in the way Verizon prices its services, the typical customer isn’t likely to see a huge shift in the amount of their monthly bill, provided their usage stays the same.
The toughest case is probably for a customer that wants to sign up for a single new smartphone. Under the new plan, a customer pays $90 a month ($40 for the smartphone and $50 for 1GB of data) and gets unlimited talk and texting. Under the old plans, the same customer could have paid that same $90 and gotten a bucket of voice minutes plus 2GB of data and unlimited text messaging.
In many combinations, though, customers can save money with the new plans. In addition, Verizon will no longer charge extra for using phones as a mobile hotspot, something that Verizon and most other carriers now charge $15 or $20 a month for.
Erwin said that Verizon spent months coming up with the new plans, efforts that included electronic and in-person surveys of 50,000 customers.
Although the initial pricing covers only traditional devices such as phones, tablets, portable hotspots and USB sticks, Erwin said that shared data plans will pave the way for whole classes of new devices aimed at consumers as well as products targeted at education and health care.
“In the future you can invision all kinds of connections,” Erwin said. “This pricing, because it is so dramatically different, really fuels the ecosystem.”
Those with existing rate plans will be able to keep them as long as they keep the device they are using, but new customers and those that want to upgrade to a new phone (without paying the full, unsubsidized price) will have to go with one of the new plans.
“We won’t force anybody to make this change,” Erwin said. “We anticipate a lot of customers will want to make a change.”