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.