Verizon’s new data plans announced on Tuesday are expected to be followed by others in the industry as wireless firms focus their attention on charges for Internet data, according to analysts.
Here is our story today on the new plan and the future of Internet service costs — which will in most cases be tiered and continue to rise as consumers use applications that consume more data.
The new plans, to launch June 28, are expected to motivate families to get more devices onto a single plan, according to analyst Craig Moffett, of Sanford C. Bernstein.
That business strategy benefits the biggest wireless carriers — AT&T and Verizon Wireless — and presents new problems for competitors trying to chip away at those firms’ dominance.
“In a world where incentives for families favor concentrating around a single provider, the biggest providers win,” Moffett said.
Indeed, families may even be inclined to connect more devices to Verizon’s network, with the perception that the biggest packages provide the most value.
That’s known in business parlance as “Volume Value” and also called the “Costco Effect,” where users will spend more upfront — even buying services and products they never considered buying at first — with the idea that they will be saving money in the long run.
“Given the economy, this is message that will appeal to consumers,” said Prashant Malaviya, an associate professor at Georgetown University’s McDonough School of Business.
But that only works if consumers feel they understand the price plans. Verizon’s data plans are complicated and hard to compare with other service providers because they are now offering text and voice calls for free.
“If they are truly trying to simplify pricing strategy, that is a step in the right direction. But it doesn’t sound like that is the case given it took you at least three minutes to explain the plan,” Malaviya said.
Maybe that’s just this reporter, though.