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Verizon Wireless will end its unlimited data smartphone plan on July 6th, pushing future customers to choose usage tiers priced at $30 for 2GB, $50 for 5GB, or $80 for 10GB. But existing customers with either 3G or 4G phones can keep their existing unlimited data plans indefinitely, according to leaked Verizon memos.
Droid Life has become information central about the end of unlimited data at Verizon, thanks to some good connections with employees willing to share internal company memos. They’ve learned Verizon also plans to make some other price adjustments effective July 7th:
Tethering pricing (in addition to your existing data plan, charged separately):
- 2GB — $20/month
- 4GB – $50/month
- 7GB – $70/month
- 12GB – $100/month
Overlimit fee: $10 per gigabyte.
Tablet plan pricing changes: Delete $20-1GB tablet plan, replaced July 7th with a $30-2GB plan.
From a Verizon memo to employees:
Data Pricing Evolution…The Present
Our legacy data pricing structure was designed to address a somewhat different customer need profile than what we are seeing and can expect in the future.Consider this. Data usage has more than doubled over the last three years. Consumers and business users alike are doing more and more with their mobile devices. The notion of “send and end” has migrated to “managing multiple aspects of one’s lifestyle through mobility.” Whether it’s social media (85%+ of Smartphone users), mobile internet (88%+ of Smartphone users), or email/applications (71%+ of Smartphone users), this usage has one thing in common—dramatically increased demand for data and media consumption.
As a result, we are evolving our approach around how we package our data solutions and pricing to our customers. Coming soon, Verizon Wireless will move from our existing pricing format to a structure designed to allow customers to choose the right data solution that best aligns with their needs.
The Value Benefit Equation…
With the new usage based pricing plans, the vast majority of our customers will be able to enjoy their typical level of data consumption for the same value that they outlay today. Additionally, for those who have greater requirements for data, we will have solutions that they can tailor to their unique needs.Perhaps more importantly, given our strong desire to continue to provide enhanced capability and value to our customers, the new data pricing will apply to both our 3G AND 4G LTE networks. So in essence, for those customers in our ever and rapidly expanding 4G LTE network coverage footprint, users will gain the benefit of the fastest and most advanced 4G LTE network in the U.S. all for the same usage based value. More speed. More functionality. Same value.
When Verizon first spoke about AT&T ending its unlimited use plans, we noted company officials seemed hesitant to sign on to AT&T’s specific pricing model. We interpreted that to mean AT&T was being too stingy in Verizon’s eyes. Stupid us. Instead, Verizon is going to charge $5 more than AT&T for most of its data plans, presumably milking its much-better reputation for service and reliability.
The existing price for Verizon’s unlimited smartphone data plan is $29.99 per month. After July 7th, one penny more buys you only 2GB on Verizon’s network.
Customers can lock in unlimited data if they sign up for service before the end of the day on July 6th. All existing customers who want to keep their unlimited data plan can, apparently even when changing phones, for the foreseeable future. But nothing is forever with AT&T or Verizon. We suspect “forever” will expire when average smartphone data usage approaches the 2GB limit their future $30 plan will feature. Currently, the vast majority of smartphone users consume less than 750MB of data per month.
Other stories of interest:
- Engadget Hints the ‘All You Can Eat’-Data Party Ends for Verizon Smartphone Owners July 29th
- AT&T Ends Unlimited Wireless Data Plans As New iPhone Arrives
- Verizon Wireless Data Corral: Herding Customers Into New Data Plans Starting January 18th
- Verizon Wireless Testing ‘Unlimited Everything’ for $99 in Los Angeles and San Diego
- AT&T Allows Long-Standing Smartphone Customers to Switch Back to Unlimited Data Plans
How’s about NO DATA?! Can I get that? NO!!! Of course not, because, “smartphones REQUIRE a data plan in order to operate properly” as I’ve been told by each and every provider, which is a complete lie in order to get you to pay AT LEAST $80/mo. But can I buy their phone and use it without having their locked software, NO. I have to hack it. That’s BS. I’ve complained to the FCC, BBB, and anyone else willing to listen. No one seems to. And I don’t understand why customers put up with this. Oh wait, THEY HAVE TO.
Of course it’s a complete lie. Any smartphone user can use (and with AT&T is encouraged to use) Wi-Fi for some of their data needs. But of course I can’t find an option on my phone to turn off 3G and only use Wi-Fi (even though the converse is true),
Wireless carriers always knew they’d quickly earn back subsidies for handsets charging enormous prices for data. $30 a month is already outrageous, considering the average customer never comes close to a gigabyte of usage, and now carriers consider that too generous.
The only lenient carriers around seem to be Cricket and MetroPCS, which will activate unlocked phones on their CDMA networks.
“Wireless carriers always knew they’d quickly earn back subsidies…”
Can we please stop using the word “subsidy”? The phones are not subsidized. If they were subsidized, you would see you bill go down after 2 yrs. The reason for the lower price is to lock you in for 2 yrs. Do you really think those phones cost as much as they tell you they cost? I got news for you, they don’t. They jack the price of those smart phones up so high, you have no choice practically but to sign a 2yr agreement. $600-$800 for an iPhone, please. I can buy a good laptop at that price and the price hardly goes down. And I totally agree with naginalf. I have been saying that exactly for several years.
There clearly is a phone subsidy, one that can you can track on providers’ financial reports. AT&T’s iPhone subsidy definitely does show up on their expense reports as a significant up front cost. Watch those reports the quarter a new model comes out and you will see it. They are not getting the discount you think, especially from Apple. Overseas, where retail phones sell for several hundred dollars above what we pay, there is clear evidence of a higher retail price than our subsidized price, and markup isn’t responsible for all of it. Does it cost Apple $600 for an iPhone — of course not, but Apple always overprices its stuff because of the brand. Most of the markup is coming from the manufacturer, not the retailer.
Nokia, which is in a real mess right now, is a good example of this. They missed the boat on smartphones people want to buy and are now HEAVILY discounting phones to carriers and large retailers. The price slashing is so great, you’d think they were having a going out of business sale. But analysts still have a “neutral” buy recommendation on this company’s stock because they are still not going to suffer a huge financial loss because of their high markups.
But, you are quite right when you say carriers do not discount the service plan once the subsidy is paid back. There are several reasons for this:
1) Gouging and profit-taking.
2) The financial value of a customer that is on month-to-month vs. a contract plan (month to month are valued less by Wall Street because you can leave anytime).
3) The business model of extending “value” with a new handset (and 2 year contract).
The North American business model is two year contracts in return for discounted phones and higher fixed priced monthly plans. The European model is to buy your own $500+ smartphone, use it until it drops, and get significantly cheaper monthly pricing based on how long you commit to stay with the carrier. Orange, for example, has the biggest service plan discounts for those who commit to stay with them for two years.
If it was a true phone subsidy, you would see the phones full price on your bill and some of your monthly bill going towards the phone. At the end of your contract, you would see a price drop on your plan. Get a phone for $200 and then try to cancel your plan say 4 months before it is up and see if your ETF is prorated.
I agree that the plan price should drop after the subsidy is repaid. I am certainly not defending carriers. The American pricing model meets the needs of people who can’t live without another phone every two years. Everyone else pays through the nose. It actually drives people to upgrades so you don’t leave money on the table. That works as long as they don’t force you into a different, more expensive plan when the upgrade occurs.
I toughed it out off-contract with Verizon for more than a year holding onto my Chocolate phone I grew to loathe, because I was not willing to cough up for a mandatory data plan. I got overcharged for service paying a rate intended to recover a subsidy they already won back more than a year before.
They will let you hold on to it for awhile, but they’ll do the same thing they did with the old America’s Choice plans and force you to change it in order to get the latest and greatest.
Yes, this is what happened with me when I upgraded to a smartphone around Xmas. I was grandfathered on America’s Choice since 2004, unwilling to upgrade to a plan that nickled and dimed me for data use (AC let you eat airtime minutes for web access). I finally switched when they offered the $10 off secondary lines deal, which I consider a $10 discount on the data plan they forced you to take. I have that for two years. After that, I will re-evaluate. Charging $30 for 2GB vs. $29 for unlimited is simply highway robbery. They are actually doing AT&T a favor if that shamed company ever upgrades its network to rival Verizon.
I was a Sprint PCS customer from the first day that service was offered locally. I always felt second-rate with them though. Coverage simply isn’t as good as Verizon, nor as robust. There are too many areas where service should work well, but simply does not. Back then, their billing and customer service was appalling as well, but things have improved there since. I’d need a lot to be persuaded to go back to them.
The FCC really needs to crack down on the forced DATA plans for Smartphone’s, and allow consumers to request a voice only plan for their Smartphone as a consumer plan.
I’d drop my data plan in a second if I could, between home and work I have WiFi 90% of the time and that’s good enough for me if it saves $30/mo off my bill.
If you take the providers own claims of the extreme costs of handling those bits and bytes that they charge a premium for, you would only think they’d be more than happy to get people off their cellular data network.
As with (I assume) anyone who got the Motorola Droid on launch day with a new contract, my Droid can be upgraded on July 7. I wonder, will they let me upgrade to a 4G plan and keep my unlimited plan?
Otherwise, I’ll be jumping to Sprint. I’d be surprised if I’ve ever exceeded 2GB, but I won’t pay for a capped plan.
From what I have been told by Verizon reps and seen on other websites, people on unlimited plans now will be grandfather in.
You will be fine keeping your unlimited plan. It seems they will treat this like America’s Choice — you can keep upgrading your phone every two years and keep the same plan. However, at some point they’ll introduce some new whiz-bang feature and only allow it to be incorporated into a new service plan, not the one you are grandfathered in on. That’s probably when one will have to sacrifice unlimited data.
High tech paperweight
I wonder if the offer to grandfather in existing users will conveniently expire a few days before a new iPhone launch, sometime in the future.
I doubt it. The new iPhone doesn’t actually look too exciting to me. I am pretty happy with my Droid X except for the random rebooting I seem to get every day or so.