Verizon to end unlimited data plans
By Cecilia Kang,
Verizon spokeswoman Brenda Raney declined Tuesday to offer details about the billing changes, saying only that the company is “making some minor changes to data plans including those for new smartphone customers.”
“We will move to a more usage-based pricing model in July,” Raney said, declining to comment on whether current customers — who use 104 million devices on Verizon’s network — would be affected.
Experts say it’s only a matter of time before all wireless carriers give up their unlimited data plans and start charging the biggest Internet users more. AT&T and T-Mobile have already moved toward tiered pricing plans, making Sprint Nextel the sole national carrier to offer unlimited plans.
Verizon’s decision comes amid AT&T’s proposed $39 billion bid to buy T-Mobile, a merger that has sparked concern that consumers won’t have as many choices and could be stuck with higher cellphone bills. T-Mobile is a low-cost competitor to AT&T and Verizon. Sprint has warned that it probably won’t survive as a stand-alone company if the merger goes through.
Verizon’s billing changes are sure to create some confusion among consumers who are often confounded by how much data an application consumes. Carriers say about one hour of streaming video a day will exceed a monthly 2 gigabytes cap.
Verizon’s new options are rumored to include a basic data plan of $30 for 2 GB of data to $80 for 10 GB.
Last year, AT&T began charging new and renewing customers $15 for 2 GB a month to $45 for 4 GB. It said 65 percent of consumers at the time would safely be able to buy the $15 plan without going over their monthly limit. It charges $10 per gigabyte over a monthly plan.
Last March, T-Mobile began charging users $10 for 200 MB a month to $60 for 10 GB, its biggest data plan. When users go over their monthly allotment, the carrier throttles service so Web connections slow to a crawl.
The carriers say the billing changes have to be done to accommodate an explosion of traffic on their networks that they haven’t prepared for. The amount of data used by smartphones doubled from one year ago, according to recent metrics by Nielsen.
The trend is expected to continue.
“The impulse behind plans like Verizon’s is rationing, pure and simple,” said Craig Moffett, a telecommunications analyst at Sanford C. Bernstein research. “Verizon is acknowledging the necessity of restraining runaway growth.”