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Verizon: No Caps for FiOS, No More Unlimited for Wireless, and Don’t You Dare Tether Without Paying

Phillip Dampier June 1, 2011 Broadband Speed, Competition, Consumer News, Data Caps, Verizon, Wireless Broadband 4 Comments

Verizon Communications is a study in contrasts.  It runs one of the most advanced wired broadband services in the country that wins rave reviews from consumers and businesses, is on the verge of ending its unlimited use data plans for smartphone customers on the wireless side, and has launched a major “police action” against individuals that are using their smartphones as wireless hotspots without paying an additional $20 a month for the privilege.

Verizon Says No to Data Caps and Consumption Billing

When you run an advanced fiber to the home network like FiOS, the concept of data caps is as silly as charging for each glass of water collected from Niagara Falls.  That’s a point recognized by Joseph Ambeault, director of media and entertainment services for Verizon.  Talking with GigaOm’s Stacey Higginbotham, Verizon continues to insist their network was built to handle both today and tomorrow’s network demands.

“Our network is always engineered for big amounts of data and right now there are no plans [to implement caps], but of course you never want to say never because things could change.”

However, in the same conversation he talked about how the FiOS service has gone from offering a maximum of 622 Mbps shared among 24 homes in the beginning to tests of 10-gigabit-per-second connections in individual homes that Ambeault mentioned. For now, Verizon is testing 10-gigabit-per-second-shared connections and offering up to 150 Mbps home connections. This kind of relish for massive bandwidth is not evident in conversations with folks at AT&T or even those cable firms deploying DOCSIS 3.0. Which is why when Ambeault added, “We don’t want to take the gleam off of FiOS,” as his final say on caps, I tend to believe that Verizon may be the last holdout as other ISPs such as AT&T, Charter and Comcast implement caps.

Verizon Says Yes to Ending Unlimited Smartphone Data Plans

Verizon is among the last holdouts still offering unlimited data plans for smartphone customers.  Priced at $30 a month per phone, these plans have proved very profitable for Verizon in the past, in part because they are mandatory whether you use a little data or a lot.  But now as data consumption grows, Verizon’s profits are not as luxurious as they once were, so the “unlimited plan” must and will go, probably within the next three months.

Verizon has always been hesitant about following AT&T’s lead for wireless data pricing, which delivers a paltry 2GB for $25 a month.  AT&T still sells its legacy unlimited plan, grandfathered for existing customers, for just $4 more per month.  So while AT&T can claim they’ve reduced the price for their data plans, they’ve also introduced a usage allowance.  Those exceeding it will find a much higher bill than the one they would have received under the old unlimited plan.

Verizon will probably echo AT&T’s tiered data plans, perhaps with slightly more generous allowances, but the real excitement came from Verizon CFO Fran Shammo, who told attendees at the Reuters Global Technology Summit it was prepared to finally introduce the much-wanted “family data plan,” which would allow every family member to share data on a single plan.  That’s a potential smartphone breakthrough as customers resistant to paying up to $30 a month per phone for each individual data plan might see their way clear to buying smartphones for everyone in the family if they all shared a single family-use data plan.

“I think it’s safe to assume that at some point you are going to have megaplans and people are going to share that megaplan based on the number of devices within their family. That’s just a logical progression,” Shammo said.

Of course, the devil is in the details, starting with how much the plan will cost and what kind of shared allowance it will offer.

Verizon Says ‘Oh No You Didn’t Tether Your Phone Without Our $20 Add-On’

Phandroid posted this copy of a message Verizon customers are receiving if they are using unauthorized third party tethering apps. (Click to enlarge.)

Earlier today, Verizon Wireless customers using popular third-party tethering apps to share their smartphone’s built-in Wi-Fi Hotspot with other nearby wireless devices began receiving the first of what is expected to be a series of warnings that the jig is up.

Tethering allows anything from a tablet computer to a netbook or laptop to share a Verizon Wireless data connection without having to pay for individual data plans for each device.  Third party software applications bypass Verizon’s own built-in app, the 3G Mobile Hotspot, which involves paying an additional $20 a month for a secondary data plan delivering a 2GB monthly usage allowance.

Just as AT&T hated to see the possibility of lost revenue passing them by, Verizon has begun ferreting out customers using these apps and sending them friendly reminders that tethering requires an official Verizon Wireless add-on plan.  While the third party apps are not yet being blocked, most expect Verizon to gradually crack down on their use if customers persist in using them.  Verizon can also block the sale of the apps from the Android Market and can also insert roadblocks to prevent their use.  Or they can follow AT&T’s lead and threaten (perhaps illegally) to automatically enroll customers caught using tethering apps in their paid tethering plans.

Currently there are 4 comments on this Article:

  1. Duffin says:

    I find the concept of a “Family Data Plan” ludicrous. In general, I don’t like the idea of “sharing phone minutes”, but I find data sharing even more ridiculous. At least with the family phone minutes, you tend to get like 5000 minutes. It would be difficult to go through that many in a month. For data, though, you’re seriously going to trust that your kids aren’t going to run up your whole data plan and just keep using it even after the allowance is reached, leaving you with no data left for anyone in the family? Give your kid a feature phone with no internet. There’s no reason for a kid to have a smartphone and this is coming from a very tech-loving guy. All a kid, who can’t pay for their own phone or service, really need is a phone that makes calls and can text people.

    Even if kids aren’t involved in the equation, I still don’t like the idea of having to share my data limits with other people unless the limit is like 50 GB/month or something. I think we all know that’s not going to happen, though. It will be maybe 8 or 10 at the most and they’ll charge $10 for each extra GB.

    • For folks who don’t want to pay $30 a month for every smartphone they own for the mandatory data plan, the option of getting a shared family usage plan can be a real money-saver, especially if you have your parents on your plan who would like a smartphone, but will never come close to being heavy data users. I recognize your scenarios as potentially valid, which is why this should be an option, not a mandate. We have three phones on our account dividing 700 calling minutes. We rarely exceed 300 minutes collectively. As far as data, I don’t think we’ve broken a combined gigabyte even though I do a lot of audio streaming on my phone.

  2. Tim says:

    I think the whole concept of having to pay extra for tethering is ludicrous. Who cares how you use your phone for data transfer. You already pay for it! That is like the cable company charging me extra for my router because I can have more than one device using my Internet connection. How do these cell phone companies get off telling you what to do with your phone that is your in the first place. They also put all kinds of ridiculous bloatware on your phone that you never use and that you can’t ever uninstall without having to do some sort of hack. It is all ridiculous. Anyway something needs to be done to give these cell phone companies a reality check.

  3. Smith6612 says:

    In a way, I can’t blame the cell phone carriers for wanting to cap their service at least for the short run, now that there is this notion that everyone and everything should go wireless being spread around by other Journalists (which people catch onto). The tethering fees however, are unnecessary as the caps on wireless service should serve the purpose should a user go overboard with tethering and data consumption. The way I see it, just simply offering the ideal unmetered plan with no worries about tethering would get the point across to people to stop using 3G/”3G on Steroids” connections as their primary connections, as the towers become congested and people realize that a traditional wireline connection would serve their data needs better.

    When true 4G service comes out, it’ll help with the congestion but it won’t change the fact I’ve suggested above.

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